By Kate Gibson and Wallace Witkowski, MarketWatch
SAN FRANCISCO (MarketWatch) -- U.S. stocks finished lower
Tuesday as worries about the so-called fiscal cliff overtook the
enthusiasm that came with home improvement retailer Home Depot
Inc.'s better-than-expected results.
"Trading like today in reaction to Home Depot is completely
sensible; other than [that] we have this fiscal-cliff issue," said
Mark Luschini, chief investment strategist at Janney Montgomery
Scott.
Erasing earlier gains, the Dow Jones Industrial Average (DJI)
tumbled 58.90 points, or 0.5%, to close at 12,756.18, with most of
the selloff coming in the final hour of trading.
Microsoft Corp.'s (MSFT) 4% loss led the Dow lower after the
software maker said its Windows chief was leaving, effective
immediately.
The sustainability of any stock-market rally could be
questionable until progress is made on budget talks, without which
more than $600 billion in automatic tax hikes and spending cuts
would kick off in January.
"The markets are going to be held hostage to that. It's just too
big of an event when you're talking up to 4% of GDP -- that's not
inconsequential," Luschini added.
Wall Street largely wants to see the issue resolved, but how
that is accomplished is less of a concern, according to the
strategist. "Whether you like the outcome or not, businesses can
adapt to that."
Home Depot (HD), the best performer on the index with a 3.6%
gain, was among the six out of 30 Dow components finishing higher.
The home-improvement retailer reported profit that topped
expectations.
Home Depot's results "speak to something that has been
remarkable: Every time you count them out, the consumer has come
back to hold up their end of the bargain," commented Luschini.
The S&P 500 Index (SPX), which also spent much of the day in
slightly positive territory, lost 5.50 points, or 0.4%, to close at
1,374.53.
The technology and financial sectors weighed, with
Hewlett-Packard Co. (HPQ), Citrix Systems Inc. (CTXS), and Genworth
Financial Inc. (GNW) among the notable decliners.
Shares of MBIA Inc. (MBI) fell 19% after Bank of America Corp.
(BAC) offered to buy the insurer's outstanding bonds to block its
moves to put space between it and a cash-deprived unit.
Consumer discretionary and utilities performed the best among
the S&P's 10 sectors, with Ross Stores Inc. (ROST), Limited
Brands Inc. (LTD), Urban Outfitters Inc. (URBN) and TJX Cos. (TJX)
following Home Depot shares higher.
The Nasdaq Composite Index (RIXF) lost 20.37 points, or 0.7%, to
2,883.89.
For every stock that rose more than two fell on the New York
Stock Exchange, where 677 million shares traded by the close.
Composite volume cleared 3.4 billion shares.
Stocks were mostly higher much of the afternoon after starting
the session lower on worries that came with euro-area leaders
failing to agree on the management of Greece's debt, pushing off a
further decision until a meeting next week.
President Barack Obama, who has invited Democratic and
Republican leaders to the White House this week to start
discussions on averting the fiscal cliff, on Tuesday met with labor
leaders. On Wednesday, Obama planned talks with business executives
including Ford Motor Co. (F) Chief Executive Alan Mulally.
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