Daily Data Flow: Stocks Fall; Bonds Risky; Obama’s New Tax Hike

Dow Reaches Lowest Level Since June on Budget, Israel Conflict (Bloomberg)
U.S. stocks sank, sending the Dow Jones Industrial Average to the lowest level since June, as concern about the budget debate and conflict in Israel wiped out an early rally. Oil jumped and Treasuries rose for a fifth day. “The recent wall of worry continues to mount,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in an interview. His firm oversees $250 billion. “Middle East geo-political tensions, continued sovereign concerns about Greece and Spain, indecision ahead of the fast-approaching fiscal cliff and the fact that the major U.S. indices continue to trade under key technical levels are all weighing on sentiment.”

Flight to Safety in Bonds May Actually Mean More Risk: Pro (CNBC)
With all of the cross-currents in the present economic and political climate, it’s become a given that many investors want to avoid the risks of stocks and embrace the relative safety of bonds. What they don’t realize is they may actually be taking on more risk by reaching for returns in overbought fixed income instruments, says John D. Boritzke, director of tax-exempt fixed income at BMO Global Asset Management.

Obama to Seek $1.6 Trillion in New Tax Revenue: Reports (Marketwatch)
President Barack Obama plans to open talks over the tax component of the so-called “fiscal cliff” by calling for $1.6 trillion in new tax revenue over the coming decade, according to reports late Tuesday. The Wall Street Journal and Washington Post reported separately that Obama’s figure for additional taxes is likely to meet with strong Republican opposition, as it is double the amount proposed during failed closed-door talks with GOP leaders during debt negotiations in mid-2011.