Stocks close lower after weak retail reports
Stock indexes closed lower Thursday, a third straight decline, as retailers issued weak forecasts for earnings and more people filed claims for unemployment benefits.
The Dow Jones industrial average wavered between small gains and losses shortly after the opening bell, then moved lower at mid-morning. It closed down 28.57 points at 12,542.38.
The Dow has lost 703 points, or 5 percent, from Election Day, Nov. 6, when it closed at 13,245.68.
Wal-Mart, Ross Stores and Limited Brands, the owner of Victoria's Secret, all fell after issuing forecasts that disappointed financial analysts. Wal-Mart fell $2.59, or 3.6 percent, to $68.72.
The Standard & Poor's 500 index dropped 2.16 points to 1,353.33; the Nasdaq composite finished 9.87 points lower at 2,836.94.
Stocks have fallen steadily since voters returned President Obama and a divided Congress to power. Investors are worried that U.S. leaders might not reach a deal before tax increases and government spending cuts take effect Jan. 1. The impact would total $700 billion for 2013 and could send the country back into recession.
Bill Stone, chief investment strategist at PNC Asset Management Group in Philadelphia, said the bargaining in Washington would likely drag on until next year, weighing on stocks. “It's hard to see the market getting a whole ton of traction until that gets settled.”
President Obama will meet with congressional leaders on Friday to talk about the budget, but he appeared to suggest on Thursday that he would insist on an increase in tax rates for the wealthy.
T. Dale, a portfolio manager at Security Ballew Wealth Management in Jackson, Miss., said stocks are more likely to fall than rise, partly because of slowing global economic growth and the budget impasse.
“The market has gotten well ahead of itself,” Dale said.
Superstorm Sandy drove the number of people seeking unemployment benefits up to 439,000 last week, the Labor Department reported. Applications for benefits rose 78,000, mostly because a large number were filed in storm-damaged states.
The European Union's statistics agency confirmed that the euro zone, the group of 17 countries that use the euro currency, is in recession. The economy in the region shrank 0.1 percent in the third quarter from the previous three-month period.