News Wrap: Nor'easter Hits East Coast With Wind, Rain and Snow
In other news Wednesday, Sandy victims and Northeast residents braced for another storm scheduled to hit the already battered East Coast, bringing powerful wind, heavy rain, and even snow. Hundreds of scheduled flights have been cancelled. Also Wall Street saw one of its worst days of the year.
HARI SREENIVASAN: Wall Street had its worst day of the year, amid worries about continuing divided government in Washington and bad news out of Europe.
The Dow Jones industrial average lost nearly 313 points to close at 12,932. The Nasdaq fell 74 points to close at 2,937.
For more on what happened, I spoke earlier with economist Hugh Johnson, who runs his own investment services company in Albany, New York.
So, Mr. Johnson, tell me, how do we distribute the weight of what's pulling the market down? Is it the fears in Europe? Is it the fears about the fiscal cliff?
HUGH JOHNSON, Johnson Illington Advisors: It's hard to tell which is more important.
They're both very important. And you know, today sort of dramatized both. The European Union formally reduced its forecast for what's going to happen to the European Union, their economy, in 2013, and they reduced it very, very sharply. That's very bad news. It's particularly bad news for any U.S. company that's doing business with Europe or selling things to Europe.
Obviously, their revenues and their earnings are going to suffer from that. So that's a big part of it. And the other part of it is the concerns, the ongoing concerns about the fiscal cliff, meaning the automatic increase in taxes and spending cuts that are going to occur at the federal government left at the end of this year, unless something is done about it.
And the belief is that, you know, with things being sort of unchanged in Washington, Obama winning, the Republicans still controlling the House of Representatives, the Democrats controlling the Senate, that it's business as usual, and that we will have trouble avoiding that fiscal cliff at the end of the year. That might mean bad things for the U.S. economy.
So I think those are both very significant concerns, and weighed on investors today, and they obviously responded by selling stocks.
HARI SREENIVASAN: OK. Also, briefly, we heard late today that Greece passed its austerity measures through their parliament. Is that likely to give the markets a bounce?
HUGH JOHNSON: Yes, I think you're going to get a bounce and I think that that certainly is going to help give it a little bit of a bounce.
I'm a little surprised at the austerity measures. There are a lot of unsettled people in Greece. The economy of Greece is clearly suffering from the austerity measures that have been imposed on Greece, an economy that's in a recession.
HARI SREENIVASAN: Yes.
HUGH JOHNSON: I think those same kind of concerns are about the U.S. imposing fiscal restraint in the form of higher taxes and less spending on our economy.
But I think you will get a little bit of a bounce tomorrow, yes.
HARI SREENIVASAN: All right, Hugh Johnson, thanks for your time.
A new storm threatened the Northeast today with wind, water and snow. Its arrival came just over a week after Hurricane Sandy battered the region.
Police cars in New York City patrolled low-lying neighborhoods, urging people to evacuate again. The approaching nor'easter brought a wintry mix of cold and snow and possibly minor flooding in already damaged coastal areas.
New York Mayor Michael Bloomberg:
MAYOR MICHAEL BLOOMBERG, I-New York: We haven't and won't order the kind of large-scale evacuation that we did in advance of Hurricane Sandy, but if you are experiencing significant flooding during Sandy, you should consider taking shelter with friends and family at a safer spot or using one of the city's storm shelters.
HARI SREENIVASAN: In New Jersey, thousands of storm-weary people braced for their brush with the new storm, even as cleanup efforts continued from Sandy.
Governor Chris Christie suggested it was a little like the biblical plagues.
GOV. CHRIS CHRISTIE, R-N.J.: When I finally got that final kind of forecast that I got last night, I said I'm waiting for the locusts and pestilence next.
HARI SREENIVASAN: The storm could also bring wind gusts of 65 miles an hour, bedeviling efforts to restore power to more than 600,000 customers still in the dark in New Jersey and New York.
CHRIS CHRISTIE: We may take a setback the next 24 hours. You need to be prepared for that. I'm prepared for that. I hate setbacks. I don't tolerate them usually very well, but this one, I can't control. The weather is what it is, and we're going to have to deal with it.
HARI SREENIVASAN: At regional airports, a new round of "canceled" notices went up, as major airlines scrapped hundreds of flights into and out of the New York City region. And all construction in the city was halted, after Sandy left a crane dangling from a Manhattan high-rise last week.
The manned behind an anti-Muslim film that triggered violence in the Middle East now faces one year in federal prison. Mark Basseley Youssef was sentenced today in Los Angeles for violating probation on an old bank fraud convention. The case is not related to the film "Innocence of Muslims," which portrayed the Prophet Mohammed as a fraud and a womanizer.
Diplomatic efforts to end the civil war in Syria entered a new phase today, hours after news of President Obama's reelection flashed around the world. British officials announced they will begin dealing directly with Syrian rebel leaders, and they urged the U.S. to join them. And Turkey confirmed it's in talks with NATO allies, including the U.S., to create a safe zone inside Syria.
One plan would deploy Patriot missiles just inside Turkey to protect civilians inside the safe zone.
Those are some of the day's major stories.