U.S. stock markets dropped this morning after President Obama's re-election victory last night with potential culprits for the plunge being looming fears of the nation's fiscal cliff and continued global economic slowdown, experts said.
The Dow Jones industrial average fell 118 points to 13,127 once the markets opened, while the Nasdaq Composite Index dropped close to 39 points to 2,973. The Standard & Poor's 500 Index fell nearly 14 points to 1,414.
"I do think now people are turning their attention back to what happens next," said Michael Goodman, a University of Massachusetts at Dartmouth public policy professor. "How these next five or six weeks play out will be how we address the looming fiscal cliff, which will have bearing on the confidence consumers and businesses have, and investors as well."
The term "fiscal cliff" refers to the expiration of Bush era tax cuts and automatic federal budget cuts set to kick in Jan. 1 as part of a deal struck to raise the debt ceiling. If Congress and the president don't reach a compromise before the end of the year, economists expect the sudden combination of tax increases and budget cuts to plunge the U.S. economy into another recession.
Goodman added that the stock market has "recovered substantially" over the last three to four years so "any given fluctuation in an hour or two should be interpreted with great caution."
"The nation and the global economy are facing real challenges," he said. "Now the election is over and the smoke is clearing, so it's time for elected leaders of all parties to get together and resolve these problems."
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