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 All three major indexes closed lower Monday, the first day of
trading in December. Investors sold shares on signs that American
shoppers — that seemingly inexhaustible fuel of global economic
growth — may hold tight to their cash this holiday season.
Shoppers turned out in record numbers over the four-day Thanksgiving
weekend, but plunked down less cash than they did last year. It was
the first decline in Thanksgiving weekend spending since a retail
trade group began tracking it in 2006.
Investors reacted by selling all types of retailer stocks, from
department stores to specialty chains. J.C. Penney, Macy's and
Target fell about 2 percent each. Urban Outfitters dropped nearly 4
percent.
"This holiday season is not going to be a gangbuster," said Lindsey
Piegza, chief economist of Sterne Agee. "Retailers are bracing for
declining activity from now to the beginning of the year."
One big exception to the retailer doldrums was Ebay, which rose 1.6
percent thanks to signs of strong sales from its online auctions.
The Dow Jones industrial average has surged 22 percent this year
and, if history holds, will add to that gain this month. The Dow has
risen in December in three out of every four years going back to
1950, according to the Stock Trader's Almanac. The average gain: 1.7
percent.
On Monday, the Dow fell 77.64 points, or 0.5 percent, to 16,008.77.
The Standard & Poor's 500 index dropped 4.91 points, or 0.3 percent,
to 1,800.90. The Nasdaq composite fell 14.63 points, or 0.4 percent,
to 4,045.26.
The government reported that developers boosted construction
spending in October at the fastest pace in more than four years. A
separate survey showed that manufacturing activity rose at its
fastest pace in 2 ½ years.
Joseph S. Tanious, global market strategist at JPMorgan, said he was
encouraged by the reports, and saw little reason to sell. But he
said many people have made so much money in the market already that
they want to play it safe and lock in gains.
"Investors are looking for reasons to sell," Tanious said. "But I
think the markets will move higher between here and the year-end."
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Stocks have soared as the economy maintains a slow but steady
recovery and companies continue to increase earnings. Demand for
stocks also has been bolstered by Federal Reserve purchases of $85
billion of bonds each month. The goal is to hold down interest
rates, make bonds less attractive than stocks, and stimulate the
economy.
Stock investors are waiting for a government report on jobs Friday
for clues about whether the stimulus policy is working and when the
Fed will ease off its bond purchases. Investors have sold on days
when they feared a Fed pullback was imminent.
In government bond trading, the yield on the 10-year note climbed to
2.80 percent, from 2.75 percent. The yield was as low as 1.63
percent in early May.
Phone companies led the broader market lower Monday. Investors
typically buy those stocks because they pay big dividends, providing
income. When interest rates climb investors sell them because the
income is less attractive compared with higher bond yields.
Other stocks making big moves:
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3M plunged $5.83, or 4.4 percent, to $127.68 after Morgan
Stanley downgraded the stock. It was the biggest loser in the
Dow and the S&P 500.
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Forest Laboratories surged $5.01 to $56.32, or 10 percent,
the biggest gain in the S&P 500. The drugmaker expects to cut
jobs as part of a plan to trim $500 million in costs, and spend
at least $400 million buying back its stock.
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Dow Chemical rose 92 cents, or 2.4 percent, to $39.98. The
company plans to either sell or spin off about 40 manufacturing
plants as it moves away from making cyclical commodities,
products whose demand is closely tied to the ebbs and flows of
the economy.
[Associated
Press; BERNARD CONDON, AP Business Writer]
AP Business Writer Steve
Rothwell contributed to this report.
Copyright 2013 The Associated
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