Home Depot surge rescues Dow from bigger loss
Stocks closed lower in uneven trading on Tuesday as fears about the “fiscal cliff” and Greece tipped major indexes between gains and losses.
A surge in Home Depot's stock prevented a steeper drop for the Dow Jones industrial average.
The Dow closed down 58.90 points, or 0.5 percent, at 12,756.18. It would have been lower without support from Home Depot, whose stock jumped 3.6 percent after the big-box retailer beat expectations for its fiscal third-quarter earnings. Home Depot is benefiting from the gradual housing recovery and rebuilding efforts resulting from superstorm Sandy. Home Depot rose $2.22 to $63.38.
Stocks opened lower as European leaders postponed the latest aid package for Greece. The Dow turned positive in the first hour of trading and rose solidly through the morning, gaining as much as 83 points. Starting about 2 p.m., the average slid steadily into the red.
Other indexes also lost ground. The Standard & Poor's 500 index lost 5.50 points, or 0.4 percent, to 1,374.53. The Nasdaq composite index fell 20.37 points, or 0.7 percent, to 2,883.89.
Investors are trading against the backdrop of the “fiscal cliff,” a set of government spending cuts and tax increases that will take effect automatically at the beginning of next year unless leaders are able to reach a compromise.
Worries about the fiscal cliff pushed U.S. stocks to one of their worst weekly losses of the year last week after voters re-elected President Obama and a deeply divided Congress. Obama met Tuesday with labor leaders and others who advocate higher taxes on the wealthy and want to protect health benefits for seniors and other government programs. Obama will meet with business leaders Wednesday.
“The longer we sit and do nothing” about the nation's fiscal issues, “the more this market is going to oscillate between positive 40 and negative 60, until we know what's going to happen next with all this uncertainty,” said Craig Johnson, senior technical research strategist with Piper Jaffray & Co. in Minneapolis.
Johnson expects the S&P 500 will reach 1,550 in the next six months as investors get over their lingering wooziness from the Great Recession and companies understand better how government policy on taxes, health care and spending will affect them.