January 7, 2012

U.S. stock indexes turned lower Monday following a week of strong gains prompted by a tax deal that derailed a predicted economic downturn.

The tax code agreement on Tuesday that raised taxes for individuals earning $400,000 and families earning $450,000 per year or more settled worries about the so-called “fiscal cliff,” a combined $500 billion tax increase/spending cut adjustment that was would have kicked in Jan. 1 without the new tax law. It was predicted to send the U.S. economy into a second recession.

But political leaders were not through posturing and decisions on spending expected in March have the potential to rattle investors. During the weekend, Senate Minority Leader Mitch McConnell said the discussion on taxes was closed. President Barack Obama had said earlier spending cuts were dependent on further changes in the tax code, MarketWatch reported.

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