The S&P 500 sold off sharply today and finished near its lows down 1.38%. The index is now off roughly 8% from its recent highs. The action in the markets was very odd today as the risk-off trade was virtually flat and Treasuries largely unchanged. Investors have grown increasingly angry with the lack of progress on the fiscal cliff and selling has taken place to lock in remaining gains. Selling was not as heavy as the declines would suggest. Selling pressure was constant throughout the day. The issue was a complete lack of buyers.
President Obama held a press conference that lasted roughly one hour. Not much was added to the bull or bear debate. It is clear that there are several sticking points that are being debated across party lines. These issues have raised uncertainty in the markets and caused people to sell. The Bush rates on upper-incomes remain an issue that is far from resolved. The President was vague about whether he would sign legislation keeping them in place.
The market held in during the press conference and then selling intensified when the President warned about the fiscal cliff uncertainty hurting holiday sales and leading to a recession. Later, a Reuters article cited comments from a Senate Democratic aide saying that Democrats want to "concentrate heavily” on revenue increases versus spending cuts, which coincided with heavy selling into the close.
Source: PFS Group
