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Markets Close Lower as Higher Retail Sales Auger Fed Pullback

NEW YORK (TheStreet) -- U.S. markets closed lower Thursday as retail sales beat expectations in November while jobless claims rose. Markets, near historic highs, have been fluctuating in anticipation of the Federal Reserve's two-day policy meeting starting on Dec. 17.

The retails sales hike bolstered the view that the Fed may reduce its stimulus program while the rise in jobless claims acted as an antidote to that forecast. 

  • The S&P 500 closed down 0.38% to 1,775.50 while the Dow Jones Industrial Average was 0.66% lower at 15,739.43. The Nasdaq edged down 0.14% to 3,998.40.
  • U.S. retail sales had their largest rise in five months during November. The Commerce Department said Thursday that retail sales rose 0.7% last month following a 0.6% gain in October. Expectations had been for a 0.6% rise.
  • By contrast, weekly initial jobless claims rose 68,000 to 368,000 in the week of December 7, higher than the 320,000 expected by economists. The data reflects seasonal volatility around the Thanksgiving and Christmas holidays. U.S. November import prices fell by an as expected 0.6%, according to the Labor Department.
  • October business inventories posted their largest gain in nine months. The Commerce Department said Thursday that inventories rose 0.7% after rising 0.6% in September. Expectations were for a 0.3% gain.
  • The House is expected to vote Thursday on the $85 billion budget deal revealed Tuesday evening, negotiated by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.). The deal outlines spending levels for 2014 and 2015.
  • Markets are bracing for the chance there could be a stimulus tapering announcement, amid improved economic data in recent months, at the next Fed policy meeting taking place on Wednesday. The event will be accompanied by forecasts, followed by a press conference. The S&P 500 is up about 27% year to date and on track for its strongest yearly increase since 1998 after the central bank stood pat on its $85 billion monthly bond purchasing program. The benchmark S&P has now risen about 167%, after sinking to a 12-year low in 2009, fuelled by three rounds of quantitative easing embarked on by the Fed.
  • Facebook (FB) shares closed 4.9% higher to $51.83 after it was announced the social networking giant would be added to the S&P 500 on Dec. 20. Facebook also is being added to the S&P 100 index. Lululemon Athletica (LULU) plunged 11.6% to $60.39 after the yoga and athletic apparel maker delivered better-than-expected third-quarter earnings but said comparable sales in the final quarter of the year will be flatHilton Worldwide rose to $21.50 or 7.5% above its IPO price. The world's biggest hotel operator raised $2.35 billion in a record IPO after selling about 117.6 million shares for $20 each.
  • Germany's DAX shed 0.66% while London's FTSE closed down 0.96%. 
-- By Jane Searle in New York

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