Stocks end lower after pessimistic 'cliff ' report
- Another report of no progress on fiscal cliff talks didn't help
NEW YORK (AP) — Stocks slipped Thursday after more signs of tension emerged from federal budget talks in Washington.
The Dow Jones industrial average lost 0.6%, down 74 points at the close to settle at 13,171. Dropping by larger margins were the S&P 500 and Nasdaq composite indexes, off 0.7% each.
House Speaker John Boehner said the White House is so resistant to cutting government spending that it risks pushing the country off the "fiscal cliff."
The "cliff" is tax increases and government spending cuts that take effect Jan. 1 unless Congress and the White House reach a deal to avert them. Economists have warned that the "cliff" could lead to a recession.
The downturn came despite the fact that applications for unemployment benefits fell sharply for the fourth straight week, a hopeful sign that layoffs are easing. Applications fell 29,000 last week to 343,000, the second-lowest this year, the Labor Department reported.
On Wall Street, health care stocks fell the most, and consumer staples stocks were down only slightly. All 10 categories of stock in the S&P 500 index were lower.
Best Buy shot up $1.95, or 16%, to $14.13 after a newspaper reported that the founder of the troubled electronics chain will make a bid of up to $6 billion for the company by the end of the week.
CVS Caremark climbed 97 cents, or 2%, to $48.51 after predicting profit next year that was ahead of Wall Street expectations. The company also raised its dividend.
On Wednesday, the Dow Jones industrial average declined for the first day in five. Stocks rallied in the afternoon after the Federal Reserve tied its pledge of super-low interest rates to an improvement in the unemployment rate, but the rally faded.
The Fed said it would hold interest rates super-low until the unemployment rate drops below 6.5%, a threshold the Fed believes may not be breached until the end of 2015. The rate is 7.7% today.
The Dow's close Wednesday of 13,245 put it within a point of its close on Election Day. After the election, stocks slid 5% as investors began to fret about the "fiscal cliff," but stocks have drifted back higher recently.
"I don't think anyone expected the markets to hold up this well as we get closer and closer to the deadline," said Randy Frederick, managing director of active trading and derivatives for Charles Schwab in Austin, Texas.
"Two possibilities: Either the markets are convinced that they'll reach some sort of agreement, or the markets don't care," Frederick said.
Among individual stocks:
— Google gained $5.14, or 0.7%, to $702.70 after releasing an updated map application for the iPhone. Google Maps came pre-loaded on previous iPhones but was dropped for the much-derided Apple Maps earlier this year.
— Shares of SolarCity, which installs rooftop solar panels, began trading on the Nasdaq under the symbol SCTY. Shares were priced at $8 and closed at $11.79 -- a 47% jump. Elon Musk, founder of PayPal and Tesla Motors, is the company's chairman.
— Clearwire, a struggling provider of mobile Internet access services, jumped 41 cents to $3.16 in heavy trading after Sprint Nextel offered to buy out minority shareholders of the company for $2.1 billion, giving Sprint total control.