Those in the press who claim to completely understand why stock market indices containing 30, 500, or thousands of individual companies went up or down on any given day are at best theorizing and at worst dissembling. The way the press handled this week's decline by blaming it all on the "fiscal cliff," as if it only became relevant on Wednesday morning, definitely fits in the latter category. Leading the pack, as usual, was the Associated Press, aka the Administration's Press.
The Dow, S&P 500, and Nasdaq all advanced modestly on Monday and Tuesday, fell sharply beginning with Wednesday's opening bell through the end of Thursday before recovering a tiny bit on Friday. But if one is to believe the AP's Steve Rothwell, the large tax increases facing the U.S. on January 1 explain the entire week's results, even though the declines didn't begin until this little thing called a presidential election was concluded on Tuesday evening after a Monday and Tuesday when no one really knew which candidate would win:
FEARING 'CLIFF,' INVESTORS FINISH BRUTAL WEEK
Wall Street is peering over the "fiscal cliff" and feeling vertigo.
The stock market finished one of the worst weeks of the year Friday, pushing Washington to work out a deal to avoid the tax increases and government spending cuts set to take effect Jan. 1.
Remarks by re-elected President Barack Obama and House Speaker John Boehner on the looming deadline didn't do much to cheer the market. Stocks finished barely higher for the day.
Chris Bertelsen, the chief investment officer at Global Financial Private Capital of Sarasota, Fla., said he expects Congress and Obama to reach a compromise to avoid the fiscal cliff.
"But it could well be the conventional U.S. political way of doing it - the last minute type of stuff - in which case the markets will be haunted by it until the point it happens," he said.
For the week, the Dow Jones industrial average fell 277 points, or 2.1 percent.
Other than the description of Obama as "reelected" in the second paragraph, no form of the word "election" appears in Rothwell's writeup.
For Rothwell's ridiculous reasoning to hold, one would have to believe that investors only discovered the fiscal cliff on Wednesday morning and took the Dow down about 300 point in just the first few hours of trading. That situation couldn't possibly have had anything to do with the fact that President Obama won reelection the night before. Sure, Steve. You keep on doing the ignoble work of the Administration's Press. People in the real world know better.
Cross-posted at BizzyBlog.com.