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Stocks fell for the third session in a row Wednesday, with retailers leading the decline amid reports of lackluster holiday sales. Meanwhile, traders continued focusing on the looming fiscal cliff.
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The Dow Jones Industrial Average fell 24.5 points, or 0.19%, to 13115, the S&P 500 dipped 6.8 points, or 0.48%, to 1420 and the Nasdaq Composite fell 22.4 points, or 0.74%, to 2990.
Retail-driven stocks, especially consumer cyclicals, posted the biggest losses on Wednesday as data began trickling in on holiday shopping. Preliminary data from MasterCard's SpendingPulse showed holiday sales inched up just 0.7% this year compared to 2% last year. This would be the weakest reading since 2008, when sales tumbled 5.5% as the financial crisis gripped the country.
The technology and utility sectors also took fairly steep falls. On the other side of the spectrum, materials shares jumped, and financial and telecommunications stocks were essentially flat.
Fiscal Cliff Jitters Remain
The markets opened the holiday-shortened week on a dour tone Monday, taking the worst pre-Christmas fall since 2006 and extending a selloff that started late last week. Market participants have been paying very close attention to budget talks in Washington, D.C. as the fiscal cliff looms just days away.
House of Representatives Speaker John Boehner called on President Barack Obama and Senate Majority Leader Harry Reid to pass legislation last week to avoid the spending cuts and tax hikes after his backup plan failed to garner enough support in the Republican-controlled House. Obama, who is flying back to Washington from Hawaii late Wednesday, hinted at a plan that at least temporarily alleviates some of the painful measures in a press conference Friday. Republicans and Democrats continued discussions at the staff level through Christmas, but higher-level talks remained on hold.
"We remain optimistic that a bare-bones, temporary fix will be cobbled together before New Year’s Eve, but the risk of a cliff encounter is increasing," a team of economists at Deutsche Bank led by Joseph LaVorgna wrote in a note to clients. The team noted that a grand bargain scenario seems less likely.
On the economic front, home prices in 20 major U.S. metropolitan areas fell 0.1% in October from September on a non-seasonally adjusted basis, a slightly shallower fall than the 0.2% economists expected, according to the S&P/Case-Shiller report. Prices climbed 4.3% from the same month in 2011.
Energy futures rallied. The benchmark crude oil contract climbed $2.31, or 2.6%, to $90.93 a barrel. Wholesale New York Harbor gasoline leapt 2.3% to $2.813 a gallon. In metals, gold rose $2.30, or 0.14%, to $1,662 a troy ounce.
The Japanese Nikkei 225 rallied 1.5% to 10230 and the Chinese Hang Seng drifted higher by 0.16% to 22541.