Wall Street reacted to President Obama’s decisive win with a sell-off. Markets closed down more than 2 percent, with the Dow plunging more than 300 points. The president’s re-election wasn’t responsible for all the turmoil today, but Wall Street was definitely rooting for Romney. His donations from finance, insurance and real estate nearly tripled President Obama’s. Polling predicted a bad night for Romney, but the reality of it still stung his fans in finance.
“It felt like my puppy got run over,” said Gene Santiccioli, a bond trader. “I feel that the United States system of government is on a very dangerous cliff right now.”
Wall Street liked Romney’s emphasis on slashing taxes on dividends and capital gains. Fiscal cliff anxiety also spooked traders. If there’s no deal to avert it, supersized tax hikes and spending cuts kick in, which could punish the still-fragile economy.
“The worry, of course, is that Obama digs in because he won and the Republicans dig in because they don’t want any tax hikes, and that we’re just back to square one,” says Miller Tabak strategist Peter Boockvar.
“Square one” is the same government we’ve had for a while: Democratic White House and Senate, with Republicans running the House. It hasn’t proven effective at getting much done. But divided government doesn’t have to mean gridlock. A Republican Congress got some important things done with President Clinton. Today, House Speaker John Boehner signaled that he’s open to compromise on the looming fiscal cliff, including higher tax revenue “under the right conditions.”
David Gergen, a former adviser to Clinton as well as Republican presidents, believes President Obama should make his top priority breaking thorough partisan gridlock to solve the fiscal cliff.
“Working that out has gotta be the number one, number two and number three,” he says.
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