Wall Street ends flat as wary investors stay defensive

NEW YORK Thu Nov 15, 2012 6:54pm EST

1 of 7. Traders work on the floor of the New York Stock Exchange, November 15, 2012.

Credit: Reuters/Brendan McDermid

Related Video

NEW YORK (Reuters) - Stocks were little changed on Thursday as the prospect of a drawn-out battle over impending tax and spending changes made investors wary of getting into the water, while retailer Wal-Mart tumbled after disappointing sales.

The S&P 500 is down nearly 2 percent for the week, adding to last week's selloff and eroding more of the market's gains for the year.

What had looked like a stellar 2012 for stocks has turned into merely an average year, and as 2012 draws to a close, investors are becoming more inclined to protect the gains they have.

The worry is the economy could contract again if no deal is reached in Washington to avoid the "fiscal cliff" - large, automatic budget cuts and tax hikes that begin to take effect in the new year.

Combined with the euro zone debt crisis, the uncertain outlook for corporations makes it hard to know how much a stock is worth, said Alan Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio.

"Valuation is going to be uncertain because you don't know what the growth will be," said Lancz. "That is definitely not a good scenario for someone to step up to the plate and do a lot of buying."

The euro zone relapsed into its second recession since 2009 in the third quarter as the region was hurt by its debt problems.

Wal-Mart (WMT.N) fell 3.6 percent to $68.72 and was the biggest drag on the Dow as frugal consumers hurt the company's quarterly sales.

Investors will be watching Friday's meeting at the White House between President Barack Obama and Republican and Democratic leaders of Congress over deficit reduction for any sign the two sides are moving closer.

The memory of last year's political impasse over raising the debt ceiling has also made analysts nervous.

"(There is) uncertainty of whether we're going to have a functioning government going forward. That is a weight that sits on markets right now," said Troy Logan, managing director and senior economist at Warren Financial Service in Exton, Pennsylvania.

Even if the economy avoids an outright recession, there are fears a lengthy political dispute could sap business investment and consumer spending.

The Dow Jones industrial average .DJI slipped 28.49 points, or 0.23 percent, to 12,542.46. The Standard & Poor's 500 Index .SPX lost 2.16 points, or 0.16 percent, to 1,353.33. The Nasdaq Composite Index .IXIC was off 9.87 points, or 0.35 percent, to 2,836.94.

The S&P 500 sunk to a 3 1/2-month closing low and was well below its 200-day moving average, which it pierced last week.

Data on Thursday showed new claims for unemployment benefits surged last week, while factory activity in the mid-Atlantic region unexpectedly shrank in November as the economy felt the effects of superstorm Sandy.

A flare-up in violence in the Middle East added to market unease as Israeli warplanes bombed targets in and around Gaza city for a second day, while two rockets fired from the Gaza Strip targeted Tel Aviv.

Apple Inc shares (AAPL.O) dragged the Nasdaq lower, falling 2.1 percent to $525.62 and down about 25 percent since September's high.

Also in the tech sector, shares of Dell Inc DELL.O fell in after-hours trading after it reported revenue that was shy of Wall Street's expectations. Dell was down 2.2 percent at $9.35.

Target Corp (TGT.N) bucked the trend, rising 1.7 percent to $62.44 after it reported a profit that beat expectations.

Volume was roughly 7.26 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE MKT, topping the year-to-date average daily closing volume of around 6.5 billion.

Decliners outnumbered advancers on the NYSE by 2,069 to 975 on the New York Stock Exchange. Decliners also had the upper hand on the Nasdaq, outpacing advancers 1,506 to 948.

(Editing by Kenneth Barry)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
Numb3rTech wrote:
We are going over a fiscal cliff whether the people in Washington reach a deal or not. There will be a depression. There are too many price increases on necessities and no wage or income increases to match. With the high deficit, there is no way to avoid a bad recession or a depression. All you have to do is look at France, Italy and Greece. Printing money may slow or ease the impact, but it will still come. Take that to the bank if you can trust them.

Nov 15, 2012 2:58pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.