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Minimum wage debate sends restaurant stocks into tailspin

February 14, 2013

The day after President Obama proposed an increase in the federal minimum wage — from the current $7.25 to $9 — during his State of the Union address, shares of McDonald's fell hard.

Marketwatch reported that Wednesday's performance of the Golden Arches accounted for about a quarter of the overall drop in the Dow that day.

McDonald's fell by $1.18, which was 9 points in the Dow's 39-point drop Wednesday.

The Huffington Post also reported that Burger King, Wendy's and Papa John's fell after the SOTU address.

Howard Silverblatt, senior index analyst for S&P Indices, told The Huffington Post that the President's minimum wage proposal "definitely adds some kind of pressure" to the stock prices of quick-service players. However, he stopped short of calling it a trend.

Peter Saleh, an analyst at Telsey Advisory Group, told Bloomberg that other factors, including last week's Blizzard Nemo, could also be affecting restaurant shares.

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