Stocks Slump on Budget Talk Worries
NEW YORK ( TheStreet) -- The major U.S. stock averages fell Tuesday amid lingering concerns about the progress of budget talks on Capitol Hill.
The rhetoric around the fiscal cliff heated up again with Senate Majority Leader Harry Reid quoted as saying he was disappointed with how the talks have proceeded so far.
A rally in overseas markets after the International Monetary Fund and eurozone officials struck a deal on the handling of Greece's long-term debt situation didn't translate to optimism on Wall Street.
The Dow Jones Industrial Average lost more than 89 points, or 0.69%, to close at 12,878. The blue-chip index, which has now fallen in two straight sessions, is up 5.4% year-to-date.Breadth was negative with losers outpacing winners, 23 to 7. The biggest percentage decliners were UnitedHealth Group (UNH), American Express (AXP), and Hewlett-Packard (HPQ). Dow gainers included Boeing (BA), 3M (MMM), and Intel (INTC). The S&P 500 fell more than 7 points, or 0.52%, to close at 1399, while the Nasdaq slid 9 points, or 0.30%, to settle at 2968. The loss snapped the tech-heavy index's six-session winning streak. The weakest sectors in the broad market were energy, basic materials, and consumer cyclicals, while conglomerates, consumer non-cyclicals and utilities were in the green. Volume totaled 3.31 billion on the Big Board and 1.76 billion on the Nasdaq. Advancers ran ahead of decliners by a 1.3-to-1 ratio on the New York Stock Exchange and a 1.2-to-1 ratio on the Nasdaq. "An agreement to avert the fiscal cliff before year-end remains our central assumption, though it continues to look like a fairly close call given the political obstacles to a deal," said Goldman Sachs economists in a morning note. "If a deal is reached, we would expect a tax increase of a magnitude similar to the upper income tax cuts, though the composition might differ. Entitlement reforms also seem likely to be part of a package, particularly related to health programs. 'Downpayments' in both areas seem likely, with additional deficit reduction to be enacted in 2013 as part of a two-stage process." The working deadline for an agreement, according to Goldman, appears to be Dec. 21.
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