U.S. stock-index futures tumbled after House Republican leaders canceled a planned vote on Speaker John Boehner’s plan to raise rates for taxpayers making more than $1 million, as time runs down in budget talks.
Standard & Poor’s 500 Index futures sank 1.3 percent to 1,421.80 as of 8:55 a.m. in London, after slumping as much as 3.4 percent today. The benchmark for U.S. equities rose 0.6 percent yesterday to 1,443.69 before Boehner’s “plan B” was shelved. The gauge has risen 15 percent this year, poised for its biggest annual gain since 2009.
Boehner, an Ohio Republican, said the House did not vote on the tax because it didn’t have enough support from his party’s members. A House leadership announcement said the chamber will hold no more votes until after the Christmas holiday and will return “when needed.” Fewer than two weeks remain to avert more than $600 billion in automatic spending cuts and tax increases, known as the fiscal cliff, set to start in January.
“Dangerous political theatrics continued out of the U.S. this morning,” Gavin Parry, managing director of Hong Kong-based Parry International Trading Ltd., said by phone today. “Delays have a greater impact to the downside for markets.”
Republicans had barely got enough votes earlier to pass a spending-cut measure they brought up in a bid to gain support for Boehner’s bill among lawmakers wary of increasing tax rates without also reducing federal program costs. The Congressional Budget Office says the U.S. will probably tumble back into a recession should lawmakers fail to reach an accord on the budget.
“Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff,” Boehner said in a statement. Harry Reid, a Nevada Democrat, is Senate majority leader.