Stocks Start 2013 Sparkling

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U.S. ETFs and stocks blast off Wednesday on news of the 11th hour fiscal cliff settlement.

Wednesday’s relief rally in stocks and ETFs was triggered by the last minute settlement of a portion of the fiscal cliff debate.

etf, spy, dia, iwm, qqqTax increases were agreed upon, making permanent most of the “Bush tax cuts,” however, deficit reduction plans were pended for another two months as both sides lined up for what promises to be a hard fought battle.

Also just ahead lies the budget ceiling debate as the United States hit the currently authorized ceiling today.

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Questions now revolve around what impact all of this will have on GDP going forward.  Many analysts suggest a reduction of 1-1.5% of GDP based on the current agreement with some as yet unknown further reduction after the spending cuts are agreed upon.

Regardless of the specific outcome, it’s clear that the fiscal cliff resolution will impact GDP to a significant extent, in that current GDP estimates are in the 1-3% range.  Also, a number of analysts voiced concern that today’s agreement will adversely affect earnings and related stock and ETF prices.

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