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Stocks fall after weak retail reports

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NEW YORK (AP) — Stock indexes fell Thursday, pushing the Dow to its lowest since July, after U.S. retailers turned in mixed earnings reports.

Wal-Mart's stock dropped $2.78 to $68.50 after the company issued a weak forecast for fourth-quarter profits. Ross Stores, whose stores includes Ross Dress for Less, fell $1.41 to $53.71 after its earnings forecast for the next quarter disappointed analysts. Limited Brands, the owner of Victoria's Secret, dropped $1.19 to $45.40 after its earnings outlook also fell short of analysts' expectations.

The Dow Jones industrial average wavered between small gains and losses shortly after the opening bell, then moved decisively lower at midmorning. As of 12:03 p.m. it was down 50 points at 12,521.22. The Standard & Poor's 500 index was down five points at 1,351 and the Nasdaq composite was down 15 at 2,832.95

Stocks have fallen steadily since the Presidential election last week, when voters returned President Barack Obama and a divided Congress to power. Concern that political wrangling will stop lawmakers from reaching a deal on reducing the budget deficit has prompted the selling. The Dow lost 5 percent from Election Day, Nov. 6, through Wednesday's close.

A series of sharp tax increases and government spending cuts will go into effect Jan. 1 unless Obama and Congress reach a deal first. The impact would total $700 billion for 2013 and could send the country back into recession.

Superstorm Sandy drove the number of people seeking unemployment benefits up to 439,000 last week, the Labor Department reported. Applications for benefits rose 78,000, mostly because a large number were filed in states damaged by the storm.

The S&P 500 has declined 7.8 percent from its peak this year. The gauge reached 1,465 Sept. 14 after the Federal Reserve said it would extend its so-called quantitative easing program and buy mortgage-backed debt with the aim of lowering long-term borrowing rates to encourage spending and bolster job growth.

The central bank released the minutes of its October meeting Thursday and suggested that it may also replace a soon-to-end program of buying U.S. government bonds to lower long-term interest rates and spur job growth.

Under an existing program, known as Operation Twist, the Fed has been selling $45 billion a month in short-term Treasuries and using the proceeds to buy an equal amount of longer-term securities.

"To me the upside is far more limited than the downside right now," said T. Dale, a portfolio manager at Security Ballew Wealth Management in Jackson, MS. "The market has gotten well ahead of itself and a lot of that has been associated with what the central banks have been doing and what the government has been doing in terms of deficit spending."

Dale says there is a 50 to 60 percent chance that the U.S. will be dragged back into recession by slowing global growth.

Europe is still laboring under its ongoing debt crisis. The European Union's statistics agency confirmed that the countries of the euro zone are in recession, with GDP contracting 0.1 percent in the third quarter from the previous three-month period.

The yield on the 10-year Treasury note was little changed at 1.59 percent.

Among other stocks making big moves:

NetApp, a data storage business, jumped $2.86 to $29.97 after the company reported earnings that were higher than analysts were expecting.

Viacom, the owner of Nickelodeon, MTV and the Paramount movie and TV studio, rose $1.73 to $49.72. The media conglomerate did better than investors had expected thanks to lower costs and higher fees from cable and satellite companies for carrying its cable networks.

Petsmart, a specialty pet retailer, jumped $4.43 to $69.27 after raising its full-year outlook.

Target rose $1.48 to $62.86 after reporting that its profit rose more than analysts had forecast. The company also issued a strong outlook heading into the critical holiday season.

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