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Dow, S&P fall more than 1%

Stocks have plummeted on Wall Street, with the major benchmarks extending their losses late in the New York trading session.

With more than 5% of the S&P 500 companies reporting this week alone, we will be properly into the earnings season in the next few days. JP Morgan, Goldman Sachs and Intel are just some of the big names that we will hear from before the week is out.

Despite early signals pointing to strong gains in earnings in comparison to 2013, a pessimistic sentiment has gripped Wall Street in the afternoon session in New York, with a suspicion that even if earnings have grown, valuations have risen a little too quickly. Goldman Sachs wrote in a note today that the S&P 500 is ‘lofty by any measure,’ with its current valuation roughly 15.5. times estimated earnings.

Into the last hour of trading on Wall Street, the Dow Jones was down 1.08% or 176 points at 16,260, while the S&P 500 suffered even deeper losses, losing 1.24% of its value today. The NASDAQ 100 was the worst-performing of the three major benchmarks, sinking 1.54% to 3510.3.

Friday’s weak employment numbers had stoked talk of a slowing or deferment in tapering by the Fed, but centre-leaning officials from the Fed, such as James Bullard and Dennis Lockhart, have made comments suggesting the Fed is likely to stick on a path of tapering.

The US Treasury announced today that it enjoyed a surplus in December to the tune of $53.2 billion, with receipts lifted by the strength of the economy and higher taxes. Alongside big drops in defence spending, this takes the government’s deficit down 41% from the same time last year.

Tomorrow we have December US retail sales and earnings from JP Morgan and Wells Fargo.

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