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NEW YORK (AP) â¿¿ Investors drew little hope Wednesday for a quick compromise in U.S. budget talks after President Barack Obama insisted that higher taxes on wealthy Americans would have to be part of any deal.
Stocks fell sharply, and even a signal from the Federal Reserve that it could launch a program in December to speed job growth failed to encourage investors. The Dow Jones industrial average dropped 185 points.
Obama made clear he would seek higher tax revenue from the wealthiest Americans, which faces opposition among some Republicans in Congress. Obama said that a modest increase on the wealthy "is not going to break their backs."
"The Street was looking for him to say some magic buzzwords about avoiding the 'fiscal cliff,' about cooperation," said Sal Arnuk of Themis trading, a New Jersey brokerage. Instead, Arnuk said, the remarks were "unyielding."
The "cliff" is a package of tax increases and government spending cuts that will take effect Jan. 1 unless Obama and Congress reach a deal first. They would total about $700 billion for 2013 and could send the country back into recession.
Stocks have fallen steadily since voters returned Obama and a divided Congress to power Nov. 6. The Dow has fallen 675 points, or 5.1 percent, including three daily drops of more than 100 points.
The Standard & Poor's 500 index has dropped 5 percent in that time, returning to where it stood in late July.
"Investors' hopes that the election would end uncertainty remain unfulfilled," said Lawrence Creatura, a portfolio manager at Federated Investors in Rochester, N.Y. "It's very tough to determine what happens next."
Obama said Wednesday that he would not to cave to Republicans who have pressed for tax cuts first passed by President George W. Bush to be extended for all income earners.