NEW YORK: Stocks on Wednesday extended losses into a third session as retailers were hit after the holiday and as investors looked to the next day’s resumption of budget talks.
President Barack Obama and Congress are expected back in Washington today.
“If nothing gets decided by next Monday, the economy will not immediately plunge over the fiscal cliff as employers have not changed payroll-tax withholding rates for January payrolls and federal budget cuts would slowly phase in,” Fred Dickson, chief investment strategist at Davidson Cos., wrote in an emailed note.
That said, the stock market will likely “sell off 3 percent to 5 percent from the present level in the event that even a small temporary fiscal-cliff bridge deal is not done by early January,” Dickson added.
The Dow Jones industrial average shed 24.49 points, or 0.2 percent, to 13,114.59.
The S&P 500 index lost 6.83 points, or 0.5 percent, to 1,419.83.
Retailers were among those losing ground, with Coach Inc. down 5.9 percent, Ralph Lauren Corp. off 3.3 percent and Amazon.com Inc. off 3.9 percent.
Conversely, J.C. Penney Co. Inc. led gains on the S&P 500, with shares of the department store operator rising 4.4 percent, leaving it down 41 percent year-to-date.
The Nasdaq composite index retreated 22.44 points, or 0.7 percent, to 2,990.16.
Home prices rose 4.3 percent in October from the year before, bolstering the view of an improving U.S. housing market.
Wall Street was closed Tuesday for the Christmas holiday. Equities had fallen the prior two sessions as the White House and congressional leaders failed to reach a deal to derail automatic tax increases and spending cuts scheduled to begin in the new year.
The price of oil climbed for the first session in three, with crude futures rallying $2.37 to end at a two-month high of $90.98 a barrel.
Analysts noted that light trading volume around the holidays can mean broad swings in crude prices.
“We’ve got a very, very thin trade,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. “It doesn’t really take much buying to spike it.”
Meanwhile, prices at the pump held steady at a national average of $3.25 a gallon.