By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell Tuesday as worries
about the so-called fiscal cliff overtook enthusiasm that came with
home improvement retailer Home Depot Inc.'s better-than-expected
results.
"Trading like today in reaction to Home Depot is completely
sensible; other than [that] we have this fiscal-cliff issue," said
Mark Luschini, chief investment strategist at Janney Montgomery
Scott.
The sustainability of any stock-market rally could be
questionable until progress is made on budget talks, without which
more than $600 billion in automatic tax hikes and spending cuts
would kick off in January.
"The markets are going to be held hostage to that. It's just too
big of an event when you're talking up to 4% of GDP -- that's not
inconsequential," Luschini added.
Wall Street largely wants to see the issue resolved, but how
that is accomplished is less of a concern, according to the
strategist. "Whether you like the outcome or not, businesses can
adapt to that."
Erasing gains, the Dow Jones Industrial Average (DJI) fell 24.92
points, or 0.2%, to 12,790.16, with Microsoft Corp. (MSFT) pacing
Dow losses after the software maker said its Windows chief was
leaving, effective immediately.
Home Depot (HD) paced the gains that included 12 of its 30
components after the home-improvement retailer reported profit that
topped expectations.
Home Depot's results "speak to something that has been
remarkable: Every time you count them out, the consumer has come
back to hold up their end of the bargain," commented Luschini.
The S&P 500 Index (SPX) lost 2.31 points, or 0.2%, to
1,377.72.
The technology and financial sectors weighed, with
Hewlett-Packard Co. (HPQ) and Citrix Systems Inc. (CTXS) among the
notable decliners.
Shares of MBIA Inc. (MBI) fell sharply after Bank of America
Corp. (BAC) offered to buy the insurer's outstanding bonds to block
its moves to put space between it and a cash-deprived unit.
Consumer discretionary and utilities performed the best among
the S&P's 10 sectors, with Ross Stores Inc. (ROST), Urban
Outfitters Inc. (URBN) and TJX Cos. (TJX) following Home Depot
shares higher.
The Nasdaq Composite Index (RIXF) lost 14.48 points, or 0.5%, to
2,889.78.
For every stock rising nearly two fell on the New York Stock
Exchange, where 465 million shares traded as of 3:30 p.m. Eastern.
Composite volume cleared 2.8 billion shares.
Stocks were mostly higher much of the afternoon after starting
the session lower on worries that came with euro-area leaders
failing to agree on the management of Greece's debt, pushing off a
further decision until a meeting next week.
President Barack Obama, who has invited Democratic and
Republican leaders to the White House this week to start
discussions on averting the fiscal cliff, on Tuesday met with labor
leaders. On Wednesday, Obama planned talks with business executives
including Ford Motor Co. (F) Chief Executive Alan Mulally.
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