Markets react to fiscal cliff talks

U.S. Speaker of the House Rep. John Boehner (R-OH) speaks during a news conference November 29, 2012 on Capitol Hill in Washington, DC.

The financial markets continue to react strongly to the ongoing fiscal cliff negotiations. They fell yesterday, just moments after House Speaker John Boehner (R-OH) said no substantive progress had been made in the latest talks. But by the end of the day, the indexes did bounce back and finished higher.

Investors will trade on "every headline out of Washinton until we get a deal," says Chris Low, chief economist at FTN Financial.

According to Low, if Congress is unable to avoid the fiscal cliff, growth in the early part of next year could go negative, compared to positive growth of 1.5 or 2 percent if a bargain is struck. Low says the difference between the two outcomes could have a "massive" effect on business earnings.

About the author

Jeff Horwich is the interim host of Marketplace Morning Report and a sometime-Marketplace reporter.


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