By SCOTT STODDARD, INVESTOR’S BUSINESS DAILY
The major averages plunged by the most since early June as investors turned their attention to America’s looming fiscal crisis following President Obama’s re-election.
The Nasdaq and S&P 500 fell 2.5% and 2.4%, respectively, after falling as much as 2.8% earlier. The Dow Jones industrial average lost 2.4%, crashing through the 13,000 mark for the first time since August. Volume rose sharply compared with Tuesday, up 30% on the NYSE and 15% on the Nasdaq, according to preliminary figures.
Investors are worried that the combination of tax increases and spending cuts scheduled to take effect Jan. 1 could send the world’s largest economy back into recession unless a compromise is reached.
Whole Foods Market (WFM) lost 2%, piercing its 50-day line. The grocer was down further in post-session trading after its earnings report for the September-ended quarter disappointed investors.
Macy’s (M) reversed lower, falling 2% in strong volume. The department store operator announced Wednesday that profit for the September-ended quarter rose 13%, beating expectations. But its full-year outlook trailed Wall Street forecasts and the company warned that Superstorm Sandy would crimp sales at the start of the holiday season.
Still, Nomura analyst Paul Lejuez maintained a buy rating on the stock, citing its attractive valuation and consistent cash flow generation. The stock is 4% off its high and getting support at the 50-day line.
Qualcomm (QCOM) lost 3% during the regular session but was up sharply after hours. Profit for the September-ended quarter rose 16%, slightly below forecasts. But revenue rose a greater-than-expected 28%.
Qualcomm, a leading maker of chips used in mobile devices such as Apple’s (AAPL) iPhone, ended Wednesday down more than 10% from its 12-year high in early April.
On the upside, SodaStream (SODA) jumped more than 5% in huge volume after Q3 profit increased 58%, well above expectations. Sales rose a healthy 49%. The Israeli maker of do-it-yourself drink carbonation systems, which went public a year ago, has been making a push into the U.S. The stock is trading below its 50-day and 200-day lines.
Also Wednesday, Time Warner (TWX) climbed almost 5% in heavy trade, popping back above its 50-day line, following a better-than-expected Q3 earnings report.
On Thursday, FleetCor Technologies (FLT), Jazz Pharmaceuticals (JAZZ), Dean Foods (DF), Walt Disney (DIS) and Lions Gate Entertainment (LGF) are due to report quarterly earnings.
On the economic docket, the government will release data on initial jobless claims and the trade balance.