Stocks turn lower after consumer confidence sinks
NEW YORK (AP) — Stocks fell Thursday, pushed down by unwelcome signs that the economy is still far from repaired and that "fiscal cliff" negotiations are far from sealed.
Major stock indexes wavered between small gains and losses in early trading, then turned decisively downward after 10 a.m. That was after Senate Majority Leader Harry Reid said it appears the government will miss the deadline for avoiding the "fiscal cliff," and the Conference Board reported that consumer confidence fell to its lowest level since August.
"An unpleasant surprise," was how Hugh Johnson, chairman and chief investment officer of Hugh Johnson Advisors in Albany, N.Y., described the consumer confidence numbers. "People are worried."
It was an uneasy sentiment already made obvious this week, with reports that the holiday shopping season so far has been the weakest since the financial crisis of 2008.
Washington's stagnating budget negotiations compounded the pessimism. President Barack Obama called Reid as well as Republican Senate Minority Leader Mitch McConnell, Republican House Speaker John Boehner and Democratic House Minority Leader Nancy Pelosi to talk about the negotiations. Tax increases and government spending cuts kick in next week if Republicans and Democrats can't reach a budget compromise by Monday night.
Until recently, investors were treating the "fiscal cliff" with a measure of nonchalance. Stocks rose more or less steadily from mid-November until late last week. But now, with the deadline nearing and no deal in sight, uncertainty is rising. Thursday was the fourth straight day of stock declines in the U.S.
"This is a matter of a few personalities; it isn't something where you can analyze spreadsheets to figure out what's going on," said David Kelly, chief global strategist at JPMorgan Funds. "There are very few investors on one side or the other who have wanted to make a strong bet on this one."
The Dow Jones industrial average fell as much as 104 points in morning trading. At midday, it was down 92 points to 13,023.
The Standard & Poor's 500 was down 12 points to 1,408 and the Nasdaq composite index fell 28 points to 2,963.
Investors were unimpressed by scattered signs that the U.S. economy might be improving. The government reported that unemployment claims fell and sales of new homes rose.
"We've got lots of numbers out, and nobody's even talking about or thinking about the numbers," Johnson said. People can't take too much comfort in those reports, he said, when they "are worried about their jobs and worried about their incomes."
Among stocks making big moves:
—Chipmaker Marvell Technology Group dropped 3 percent, falling 21 cents to $7.19, after the company lost a patent case brought by Carnegie Mellon University. Marvell said it would fight the $1.2 billion ruling.
—JCPenney was down more than 5 percent after rising more than 4 percent the day before. The stock has been volatile as the company tries to remake its image to attract younger shoppers. JCPenney fell $1.12 to $19.63.
In Japan, the benchmark Nikkei 225 index rose to its highest close since March 2011. The country is preparing for the incoming, pro-business prime minister, Shinzo Abe. He has called for more public works spending to reinvigorate the economy, and measures to drag the country out of deflation, or steadily declining prices.
AP Business Writer Daniel Wagner contributed from Washington.