* Retail stocks among S&P; 500’s biggest decliners
* Some of 2012’s best gainers rise on window dressing
* Obama heads back to Washington after vacation
* Dow off 0.2 pct, S&P; 500 down 0.5 pct, Nasdaq off 0.7 pct
By Ryan Vlastelica
NEW YORK, Dec 26 (Reuters) – U.S. stocks fell for a third
straight day on Wednesday, dragged lower by retail stocks after
a report showed consumers spent less in the holiday shopping
season than last year.
Trading was light, with volume at a mere 4.01 billion shares
traded on on the New York Stock Exchange, the Nasdaq and NYSE
MKT, well below the daily average so far this year of about 6.48
billion shares. The day’s volume was the lightest full day of
trading so far in 2012. Many senior traders were still on
vacation during this holiday-shortened week and major European
markets were closed for the day.
Many investors said concerns about the “fiscal cliff” kept
shoppers away from stores, suggesting markets may struggle to
gain any ground until that issue is resolved. The CBOE
Volatility Index or VIX, Wall Street’s favorite barometer
of investor anxiety, rose 4.46 percent, closing above 19 for the
first time since Nov. 7.
A number of 2012’s strongest performers advanced, a sign
that portfolio managers may be engaging in “window dressing,” a
practice where market participants buy securities with big gains
to improve the appearance of their holdings before presenting
the results to clients. Bank of America Corp, which has
more than doubled in 2012, added 2.6 percent to $11.54 on
Wednesday.
Holiday-related sales rose 0.7 percent from Oct. 28 through
Dec. 24, compared with a 2 percent increase last year, according
to data from MasterCard Advisors SpendingPulse. The Morgan
Stanley retail index skidded 1.8 percent while the SPDR
S&P; Retail Trust slipped 1.7 percent.
“With the ‘fiscal cliff’ hanging over our heads, it was hard
to convince people to shop, and now it’s hard to convince
investors that there’s any reason to buy going into year-end,”
said Rick Fier, director of trading at Conifer Securities in New
York, which has about $12 billion in assets under
administration.
President Barack Obama is due back in Washington early
Thursday for a final effort to negotiate a deal with Congress to
bridge a series of tax increases and government spending cuts
set to begin next week, the so-called “fiscal cliff” many
economists worry could push the U.S. economy into recession if
it takes effect.
Coach Inc fell 5.9 percent to $54.13 as the S&P;
500’s biggest decliner, followed by Amazon.com, down
3.9 percent at $248.63, and Abercrombie & Fitch, off 3.5
percent at $45.44. Ralph Lauren Corp, Limited Brands
and Gap Inc also ranked among the S&P; 500’s
biggest decliners.
The Dow Jones industrial average slipped 24.49
points, or 0.19 percent, to 13,114.59 at the close. The Standard
& Poor’s 500 Index shed 6.83 points, or 0.48 percent, to
1,419.83. The Nasdaq Composite Index dropped 22.44
points, or 0.74 percent, to 2,990.16.
J.C. Penney Co was a notable exception to the
weakness in retail stocks, surging 4.4 percent to $20.75 as the
S&P; 500’s biggest gainer. It was followed closely by Bank of
America and Genworth Financial, which each gained nearly
3 percent for the day.
“People want to show they own names like these, making them
prime ‘window dressing’ candidates,” said Wayne Kaufman, chief
market analyst at John Thomas Financial in New York.
“Bank of America keeps going up even though it’s overbought
and you’d expect a pullback at these levels. No one wanted it
when it was under $10 a share, but they want it now.”
The S&P; 500 has fallen 1.5 percent over the past three
sessions, the worst three-day decline since mid-November. The
Dow Jones Transportation Average, viewed as a proxy for
business activity, fell 0.6 percent.
A Republican plan that failed to gain traction last week
triggered the S&P; 500’s recent drop, highlighting the market’s
sensitivity to headlines centered on the budget talks.
During the last five trading days of the year and the first
two of next year, it’s possible for a “Santa rally” to occur.
Since 1928, the S&P; 500 has averaged a gain of 1.8 percent
during that period and risen 79 percent of the time, according
to data from PrinceRidge.
“While it’s unlikely there could be a budget deal at any
time, no one wants to get in front of that trade,” said
Conifer’s Fier. “Investors can easily make up for any gains when
there’s more action in 2013.”
Data showed U.S. single-family home prices rose in October,
reinforcing the view that the domestic real estate market is
improving, as the S&P;/Case-Shiller composite index of 20
metropolitan areas gained 0.7 percent in October on a seasonally
adjusted basis.
Decliners outnumbered advancers on the New York Stock
Exchange by a ratio of about 2 to 1, while on the Nasdaq, more
than five stocks fell for every three that rose.
