Stocks Succumb to Late Selloff
Still "in the near term, the U.S. economy faces significant downside risks from the intensification of the fiscal restraint that is likely to occur even if policymakers resolve most of the 'fiscal cliff,'" warned Jan Hatzius, chief economist at Goldman Sachs. "Under our baseline estimate for the shape of a fiscal agreement -- which involves an end to the payroll tax cut, an end to the upper-income Bush tax cuts, and various smaller forms of restraint -- fiscal policy at the federal, state, and local level will subtract around 1-3/4 percentage points from real GDP growth in the first half of 2013, roughly 1 percentage point more than in 2012."
Meanwhile, a meeting of eurozone finance ministers concluded without any concrete decisions on whether and when to unlock the next tranche of bailout money for Greece, though there was an agreement to give Greece two more years to fix its deficit.
On the economic data front, the ICSC/Goldman Sachs retail index found same-store sales increasing 0.7% in the week ended Nov. 10. The advance was driven by restocking in the Northeast after Hurricane Sandy. Sales rose at a soft rate of 1.8% year over year.
The Redbook's same-store sales index also showed an improvement in the week ended Nov. 10, rising by 1.6% from last year but the growth was considered tepid.
Also, the National Federation of Independent Business reported that its small-business optimism index rose to 93.1 in October from 92.8 in September, compared with the average analyst expectation of a print of 92.5.
The federal budget for October came in at a deficit of $120 billion, wider than expectations for a $113 billion deficit.
The FTSE 100 in London settled up 0.32%, while the DAX in Germany finished up 0.08% on Tuesday. Japan's Nikkei average settled down 0.18% and Hong Kong's Hang Seng closed lower by 1.13%.
The ZEW German economic-expectations index showed a decline in November versus the forecasts for an improvement.
Gold for December delivery slid $6.10 to settle at $1,724.80 an ounce at the Comex division of the New York Mercantile Exchange, while December crude oil contracts fell 19 cents to close at $85.38.
The benchmark 10-year Treasury was unchanged, stalling the yield at 1.594%. The dollar was up incrementally, according to the U.S. dollar index.
In corporate news, Dick's Sporting Goods (DKS) shares rose 4.7% after the company announced better-than-expected third-quarter earnings. Same-store sales grew 5.1%.
Michael Kors (KORS) shares bumped up 0.85% after the luxury goods maker reported better-than-expected quarterly results and lifted its full-year earnings projection, and reported strength in its flagship brand.
Yahoo! (YHOO) is preparing to launch a major overhaul of Yahoo Mail, which sources told AllThingsD said has a cleaner, "more Gmail-like" look.