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) -- Major U.S. stock markets fell Wednesday for a fifth session as the

S&P 500

posted its longest losing streak since December, reflecting uncertainty about the strength of the economic recovery and a deal on the U.S. budget.


S&P 500

slipped 0.27% to 1,692.77 while the

Dow Jones Industrial Average

shed 0.4% to 15,273.26. The


fell 0.19% to 3,761.10.

J.C. Penney

(JCP) - Get J. C. Penney Company, Inc. Report

was one of the worst performers in the S&P, slumping to its lowest level in more than a decade as

Goldman Sachs

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initiated coverage of the company's debt at "underperform." The analysts wrote that "a combination of weak fundamentals, inventory rebuilding, and an under-performing home department will likely challenge J.C. Penney's liquidity levels in the third quarter." J.C. Penney shares tumbled more than 14.5% to $10.17.

Carnival Corporation

(CCL) - Get Carnival Corporation Report

was also a lagging performer, giving up more than 5% to $32.70 after the cruise line operator's stock was downgraded by a number of analysts including those at

Morgan Stanley

following its disappointing outlook. Morgan Stanley analysts reduced their view on the stock to "underweight" from "equal weight" with a $32 price target.

"As we move from one worry to the next worry, all that saber rattling that's going on in Washington D.C. ... that's disconcerting to people because we've had this very, very, very long rally, it's been way too long since we've had a correction, and the politicians are playing chicken," Erik Davidson, the San Francisco-based deputy chief investment officer for Wells Fargo Private Bank, which oversees $170 billion, said over the phone.

"Everything is going so well, the economy is going okay, profits are doing well, Europe is getting back on its feet, China seems to be working out okay, Syria seems to be doing okay, so many things are working and then you know, along come the politicians and they could if they're not careful ... this could become a game of chicken that goes quite badly."

While investors stay fixated on the heated debates on the continuing resolution financing the federal government, anxiety about a public default continued to weigh down the markets as well. On Wednesday U.S. Treasury Secretary Jack Lew urged lawmakers to raise the $16.7 trillion federal debt limit as soon as possible, warning that the U.S. will begin to fall short on the cash needed to pay its bills "no later than Oct. 17."

Durable-goods orders rose by a slightly better than expected 0.1% in August versus expectations that it would come in flat and after falling by a downwardly revised 8.1%, the Census Bureau reported. Orders excluding the transportation component fell 0.1% versus the expectation of a 1% rise and after declining by an upwardly revised 0.5%.

Andrew Wilkinson, the New York-based chief economic strategist at Miller Tabak, said in a note that while the report was not weak overall, it does not point to an acceleration of activity and argues in favor of the FOMC's recent decision to await further data points that might indicate sustainability of demand.

New-home sales rose to a greater than expected seasonally adjusted annual rate of 421,000 in August from a downwardly revised 390,000 in July, according to the Census Bureau, versus the expected rate of 420,000. Despite the rebound, the pace of sales remains well below the 458,000 peak reached earlier this year suggesting that there is "a long way to go" for the sector, Millan Mulraine, director of U.S. research and strategy at TD Securities in New York, commented in a note.

The benchmark 10-year Treasury was rising 10/32, diluting the yield at 2.622%.

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-- Written by Andrea Tse in New York

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Andrea Tse