U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, as President Barack Obama and Congress prepared to resume budget talks and retailers slumped after the Christmas holiday.
Eight out of 10 groups in the S&P 500 retreated. Coach Inc. and Ralph Lauren Corp. declined at least 3.3 percent as consumer discretionary stocks fell. Apple Inc., the world’s most valuable company, slipped 1.1 percent as technology companies posted losses. Cliffs Natural Resources Inc. gained 1.8 percent as raw- material stocks advanced amid speculation Japan’s new government will act to bolster the economy.
The S&P 500 fell 0.3 percent to 1,421.92 at 3:16 p.m. in New York, paring a decline of as much as 0.7 percent. The index’s three-day losing streak is the longest since Nov. 15. The Dow Jones Industrial Average dropped 12.17 points, or 0.1 percent, to 13,126.91 today. Trading in S&P 500 companies was 34 percent below the 30-day average at this time of day. European markets remained closed for a second day.
“The finance center is still Washington right now,” Scott Armiger, a money manager at Christiana Trust in Greenville, Delaware, said in a telephone interview. Christiana Trust has $14 billion in client assets. “With the fiscal cliff, the questions are how bad will the deal be or will they just extend it and let the new Congress address it?”
U.S. equity markets were closed for the Christmas holiday yesterday. The S&P 500 dropped 1.2 percent over the previous two trading days amid concern policy makers will fail to strike a compromise on more than $600 billion in automatic budget cuts and higher taxes, the so-called fiscal cliff. The gauge has still rallied 13 percent this year, on course for its largest annual gain since 2009.
House Speaker John Boehner and the president have been unable to agree on tax-rate increases for top earners or cuts to entitlement programs, complicating the chances of getting a package done. Congress is due to return to Washington tomorrow, the same day Obama will arrive from his Christmas vacation in Hawaii.
Before going on vacation, Obama urged leaders of both parties to put together an interim bill to keep taxes from rising on middle-income Americans as they work on a more comprehensive package.
U.S. stocks rose earlier today as Shinzo Abe, whose Liberal Democratic Party won a landslide victory in the Dec. 16 election, said his government’s mission is to restore a strong economy. Abe, speaking in a televised press conference after being officially sworn in by Emperor Akihito, said top priorities include bold monetary policy and a flexible fiscal policy.