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The markets headed south on Wednesday as investors digested Fed comments, housing numbers and the potential negative impact on the economy that a political showdown in Washington could bring. Comments released from the Fed this week indicated that an easing of the stimulus measures that have been in place since the depths of the financial crisis may be forthcoming. As noted earlier this week, investors pretty much shrugged off similar comments in January, but a re-emphasis of those statements this week - coupled with the recent slowdown in housing numbers - caused enough concern among investors to spark the round of profit-taking that led to Wednesday's decline.

Budget negotiations in Washington also look to be at a standstill, another cause for alarm over the short term. Severe spending cuts could be in store come 1 March, should an agreement not be reached in D.C. As the politicians continue to draw lines in the sand, it's looking more likely every day that a deal might not be reached this time around, as was the case during the last 'fiscal cliff' scenario. Cautious investors predicting a stalemate in negotiations may be prepared to pull some money from the table now in anticipation of an broad market slip, as indicated by Wednesday's drop...

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