Wall Street dips on "fiscal cliff" fear but off lows


The S&P 500 was on track to fall for a third day on Thursday as Wal-Mart Stores Inc reported disappointing results and investors feared the "fiscal cliff" will harm the economy.

Stocks have struggled recently to hold onto even slight gains, dropping more than 1 percent on Wednesday after starting the session higher.

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Investors worry the economy could slip into recession if no deal is reached in Washington to avoid the fiscal cliff - budget cuts and tax hikes that begin to take effect in the new year. The S&P 500 is off about 2 percent for the week so far.

"Presently, investors are grappling with over-arching market issues, such as fears about the looming 'fiscal cliff,' as well as typical seasonal issues such as year-end portfolio repositioning," said Melissa Roberts, lead analyst at quantitative research of Keefe Bruyette & Woods in New York.

"Individual stock performance is now more impacted by overall market performance and broad macro issues rather than company-specific fundamentals."

Investors will closely watch for any clues coming out of Friday's meeting at the White House between President Barack Obama and Republican and Democratic leaders of Congress over deficit reduction.

"In terms of the market, all eyes now are on the congressional meeting tomorrow with the White House," said Peter Boockvar, managing director at Miller Tabak & Co in New York.

"With a very oversold market and bearishness at the individual investor level at the highest since August 2011, a bounce is due if there is any positive commentary in that meeting," he added.

The Dow Jones industrial average was down 29.07 points, or 0.23 percent, at 12,541.88. The Standard & Poor's 500 Index was down 1.69 points, or 0.12 percent, at 1,353.80. The Nasdaq Composite Index was down 9.54 points, or 0.34 percent, at 2,837.27.

The benchmark S&P 500 index closed on Wednesday at the lowest level since July 25, while the Dow and Nasdaq ended at their lowest since late June. Since the November 6 election the S&P 500 is down about 5 percent.

Wal-Mart fell 4 percent to $68.50 after reporting third-quarter revenue that missed expectations. The world's largest retailer said economic conditions were weighing on customers' spending decisions.

Apple Inc shares also weighed on the market, falling 1 percent to $531.85 and down about 24 percent since September's high.

But retailer Target Corp rose 1.5 percent to $62.32 after it reported a profit that beat expectations.

Despite the recent decline, the S&P 500 is up 7.5 percent so far this year, though at its 2012 peak the benchmark index was up about 17 percent.

Weekly jobless benefits claims spiked last week, reflecting the impact of superstorm Sandy. The storm also hurt economic activity in the mid-Atlantic states. The Philadelphia Federal Reserve Bank's business activity index for last month fell more than expected, sending stocks lower.

The index is one of the early indicators of a national manufacturing report later from the Institute for Supply Management.

NetApp Inc surged 10.7 percent to $30.04 a day after reporting adjusted second-quarter earnings that beat expectations and forecasting a strong current quarter.

(Editing by Kenneth Barry)