U.S. stocks dropped on Tuesday after Senate Majority Leader Harry Reid said little progress has been made in talks aimed at averting the so-called fiscal cliff.
The Dow Jones Industrial Average declined 89.24 points, or 0.7%, to end at 12,878.13, with 23 of its 30 components in negative territory. Hewlett-Packard Co. was the top decliner in the Dow, with its shares slumping 3%.
“The dominant item on the market’s mind continues to be the fiscal cliff,” Brad Sorensen, director of market and sector analysis at the Charles Schwab Center for Financial Research, said of negotiations on Capitol Hill.
The market’s intensified decline came after Sen. Reid, the Nevada Democrat, expressed disappointment to reporters about the negotiations to avert billions in automatic spending cuts and tax hikes set to start in the new year.
Reid also said he agrees with President Barack Obama that Social Security should not be part of a fiscal-cliff deal.
“The staffers are doing the legwork, while their bosses are trying to find the cameras,” Art Hogan, market strategist at Lazard Capital Markets, said of legislative efforts to reach a deficit-cutting deal.
“The good news is, we’ll build the case for equities while waiting for Washington to have a crisis of common sense,” he said.
The S&P 500 index shed 7.35 points, or 0.5%, to close at 1,398.94, with utilities the strongest performing sector and energy and financials the worst among the 10 major industry groups.
The Nasdaq Composite index dropped 8.99 points, or 0.3%, to end at 2,967.79, snapping a six-session winning streak.
Around 689 million shares traded on the New York Stock Exchange. Composite volume topped 3.3 billion.
Greece loan approved
In Europe, finance ministers reduced the rates on loans granted in the first financial rescue of Greece in mid-2010, while approving the next loan installment for the nation in December.
The step did little, however, for the euro , which fell against other currencies, including the U.S. dollar .
The euro’s decline “likely reflects selling on the fact, with an agreement long expected and the euro-zone economic outlook still underwhelming,” wrote Nick Bennenbroek, head of currency strategy at Wells Fargo Bank.
The price of oil fell, with crude futures losing 56 cents to $87.18 a barrel, on expectations an Department of Energy report Wednesday could show an increase in U.S. supplies.
U.S. stocks were little moved following data showing U.S. consumers’ confidence climbed in November to the highest level seen in more than four years.
The rise in consumer sentiment supports the “relatively positive” retail sales rung up during the long holiday weekend, said Sorensen. “Consumers are not holding back due to the fiscal cliff. It’s more of an issue for Wall Street and businesses than the consumer at this point.”
And, whatever stress the average American might feel about the potential impact may well be alleviated by recent history, which had politicians getting a debt deal done at the last minute in July 2011, Sorensen said. “You can only cry wolf so many times.”
The confidence gauge was among a collection of data points released Tuesday that were by and large ignored by investors.
“Consumer confidence is very important to us, but we’ll ignore. We’ll start to pay attention to economic data as soon as we stop paying attention to negotiations in Washington over the fiscal cliff,” said Lazard’s Hogan.
Marketwatch
