Thursday, July 29, 2010

Report: Ending Bush tax cuts will lead to 8.6% drop in stock market

Do you have a 401k plan? Do you own stocks or mutual funds? Yes, they've taken a beating over the last couple of years, but are you aready for another thrashing?

From The Hill:

The scheduled tax increase on capital gains and dividends at the end of the year will cause an 8.6 percent drop in the Standard & Poor's 500 Index, according to a report by Barclays Capital.

Barry Knapp, who heads up the U.S. Portfolio Strategy at Barclays, told The Hill that the percentage drop could also be attributed to the Dow Jones Industrial Average.

"If you assume the relationship between the Dow and the S&P 500 is stable, which it is over time, than that’s fair," he said.

The S&P 500 has become the primary indicator for the health of the overall U.S. stock market by reflecting the activities of large-cap companies and is considered one of the most renowned indexes since the Dow reflects only the actions of 30 companies.
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