Stocks Slump for First Time This Week as Fiscal-Cliff Talks Skid
NEW YORK ( TheStreet) -- Major U.S. stock averages fell for the first time this week as politicians wrangled over the "fiscal cliff" deal in Washington.
A bright spot was the rising optimism over the housing market recovery.
The Dow Jones Industrial Average was down 99 points, or 0.74%, at 13,252 on Wednesday. The blue-chip index is up more than 9% this year.
Shares of conglomerate GE slid 3.1% as UBS took the stock off its "key call" list, citing the risk of softer-than-predicted profit amid uncertain economic conditions.
Alcoa shares shed 3% as the company faces the possibility of a downgrade from Moody's, potentially pushing its credit ratings into junk territory, because of a steep decline in aluminum prices this year.
Action was mixed among sectors in the broader market with conglomerates, health care, utilities and basic materials among those in the red. The capital goods, consumer cyclical and transportation sectors rose.
Decliners edged advancers incrementally on the New York Stock Exchange , but winners slightly beat losers on the Nasdaq. Volumes totaled 3.78 billion shares on the Big Board and 1.90 billion shares on the Nasdaq.
"As for the fiscal cliff, the rejoicing over a deal yesterday and ebullience in the equity market is taking the first step toward realizing that no deal is done and positions are hardening," said Richard Gilhooly, U.S. director of interest rate strategy at TD Securities. "The threat of veto of Plan B will not sit well with the GOP and talks are likely to extend beyond next Tuesday."
The White House said Wednesday that President Barack Obama would veto Republicans' "Plan B," a proposal that was put forth as a back-up in case the budget negotiations couldn't be resolved by Jan. 1.
Plan B would raise tax rates on Americans with incomes of more than $1 million and could address the estate tax and the alternative minimum tax. However, it would not avert the spending reductions that would set in next year.
"It is my contention that the constructive technical action of the underlying market will not be toppled by a setback in the fiscal cliff negotiations," said Gene Peroni, senior vice president of equity research at Advisors Asset Management. "That being said, the 'cliff' is a serious situation that, until resolved, is likely to impede the Dow's progress beyond its recent highs around 13,600."