U.S. Stocks Retreat on Federal Budget Deadline Concern
U.S. stocks fell, after the biggest tumble in five weeks for the Standard & Poor’s 500 Index, amid concern that President Barack Obama and Congress will fail to agree on a budget by the end of the year.
Seven out of 10 groups in the S&P 500 slumped. Hewlett-Packard Co. led losses among the biggest U.S. companies. Chevron Corp. slid 1 percent as energy companies fell. Research In Motion Ltd. (RIM) erased 2.8 percent, after the largest drop since 2008 on Dec. 21. J.C. Penney & Co. and Home Depot Inc. paced gains with consumer discretionary stocks as shoppers made last-minute dashes to buy gifts.
The S&P 500 retreated 0.2 percent to 1,426.66 in New York. The Dow Jones Industrial Average lost 51.76 points, or 0.4 percent, to 13,139.08. New York Stock Exchange trading closed at 1 p.m. ahead of the Christmas holiday. Trading in S&P 500 companies was 38 percent below the 30-day average for that time of day.
“The action last week in Washington flipped the switch for short-term market movement from up to down,” Frederic Dickson, who helps manage $32 billion as chief investment strategist at D.A. Davidson & Co. in Lake Oswego, Oregon, said in a telephone interview. “The action picks up later in the week, when politicians return to Washington but it’s going to take them a couple days to figure out what to do. Today’s a wait-and-see day.”
The S&P 500 is heading for a 0.7 percent gain this month as Obama and Republican leaders discussed how to avoid more than $600 billion in tax increases and spending cuts -- known as the fiscal cliff -- that will automatically take effect at the start of 2013. The Congressional Budget Office has said the changes will probably push the U.S. economy into a recession. The equity benchmark has increased 13 percent this year, heading toward its biggest annual gain since 2009.