Stocks fell for a third straight day on Wednesday, dragged down by retail stocks after a report showed a decline from last year’s holiday shopping.
Trading was light, with volume well below this year’s daily average. The day’s volume was the lightest full day of trading in 2012. Many senior traders were still on vacation during this holiday-shortened week, and major European markets were closed for the day.
Many investors said concerns about the United States budget discussions and the possibility of tax increases kept shoppers away from stores, suggesting markets may struggle to gain any ground until that issue is resolved. The CBOE Volatility Index, a barometer of investor anxiety, rose 4.46 percent, closing above 19 for the first time since Nov. 7.
A number of 2012’s strongest performers advanced, a sign that portfolio managers may be buying securities with big gains to improve the appearance of their holdings before presenting the results to clients. Bank of America, which has more than doubled in 2012, added 2.6 percent, rising to $11.54 on Wednesday.
Holiday-related sales rose 0.7 percent from Oct. 28 through Dec. 24, in contrast to a 2 percent increase last year, according to data from MasterCard Advisors SpendingPulse. The Morgan Stanley retail index fell 1.8 percent, while the SPDR SP Retail Trust slipped 1.7 percent.
“With the ‘fiscal cliff’ hanging over our heads, it was hard to convince people to shop, and now it’s hard to convince investors that there’s any reason to buy going into year-end,” said Rick Fier, director of trading at Conifer Securities in New York.
President Obama is due back in Washington early Thursday for a final effort to negotiate a deal with Congress to bridge a series of tax increases and government spending cuts set to begin next week, the so-called fiscal cliff many economists worry could push the nation’s economy into recession if it takes effect.
Coach fell 5.9 percent to $54.13 as the biggest decliner in Standard Poor’s 500-stock index, followed by Amazon.com, down 3.9 percent at $248.63, and Abercrombie Fitch, off 3.5 percent at $45.44. Ralph Lauren, Limited Brands and Gap also ranked among the S. P. 500’s biggest decliners.
The Dow Jones industrial average slipped 24.49 points, or 0.19 percent, to 13,114.59. The S. P. 500 lost 6.83 points, or 0.48 percent, to 1,419.83. The Nasdaq composite index dropped 22.44 points, or 0.74 percent, to 2,990.16.
J. C. Penney was a notable exception to the weakness in retail stocks, surging 4.4 percent to $20.75 as the S. P. 500’s biggest gainer. It was followed closely by Bank of America and Genworth Financial, which each gained nearly 3 percent for the day.
“People want to show they own names like these, making them prime window-dressing candidates,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.
“Bank of America keeps going up even though it’s overbought and you’d expect a pullback at these levels,” he said. “No one wanted it when it was under $10 a share, but they want it now.”
The S. P. 500 has fallen 1.5 percent over the last three sessions, the worst three-day decline since mid-November. The Dow Jones transportation average, viewed as a proxy for business activity, fell 0.6 percent.
“While it’s unlikely there could be a budget deal at any time, no one wants to get in front of that trade,” said Mr. Fier of Conifer. “Investors can easily make up for any gains when there’s more action in 2013.”
Data showed that single-family home prices rose in October, reinforcing the view that the domestic real estate market was improving, as the S. P./Case-Shiller composite index of 20 metropolitan areas gained 0.7 percent in October on a seasonally adjusted basis.
Article source: http://www.nytimes.com/2012/12/27/business/daily-stock-market-activity.html?partner=rss&emc=rss
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