Stocks Decline; Retail Slips, Energy Rises
Stocks declined modestly amid thin holiday trading and after a couple lackluster economic reports as the Northeast recovered from a huge snowstorm.
The Dow Jones Industrial Average fell slightly after closing mixedon Monday.
Caterpillar , Walt Disney and American Express led blue chips lower, while Bank of America and Hewlett-Packard rose.
The S&P 500 and the Nasdaq also fell. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose to nearly 18.
Among key S&P sectors, consumer discretionary, industrials and utilities fell, while energy and materials rose.
Oil prices rose slightly to trade just shy of a 26-month high of $91.88, aided in part by a weaker dollar. The U.S. currency fell against a basket of currenciesTuesday, reaching a low against the Swiss franc. Higher oil prices pushed energy stocks higher, including Anadarko Petroleum , Occidental Petroleum , Chevron and Exxon Mobil.
Gold, meanwhile, jumped 1.5 percent to more than $1,400 an ounce,while copper futures hit a new high,thanks to the weaker dollar and stronger Chinese currency.
Just over a month after its initial public offering, General Motors was lavished with positive ratingsby Wall Street brokerages, sending its shares higher, as the automaker heads into a new product cycle.
GM was initiated at a "buy" rating by Citigroup and Bank of America Merrill Lynch, at "outperform" by RBC Capital and Credit Suisse, and at "overweight" by Morgan Stanley, JPMorgan, and Barclays Capital. Price targets for GM ranged from $42 a share at Barclays and RBC Capital, to $50 share at Morgan Stanley. Soleil Securities was the only brokerage with a cautious forecast, initiating the stock at a "hold" and a price target of $38 a share.
Molycorp soared more than 7 percent Tuesday, getting a boost after China announced it was cutting its rare-earth mineral exports. Molycorp owns a rare earth mine in California, and is expected to benefit should China curtail its exports.
American International Group could net up to $3 billion as it tries again to sell its Taiwan insurance unit.
In tech news, Hewlett-Packard shares rose after news the tech giant won a $2.5 billion 10-year contract to provide computers and services to NASA.
Sears Holdings rose after news the retailer launched an online movie download service, Alphaline Entertainmen. Sears and K-Mart customers can use the service to download movies the same day they are released on DVD.
A fierce winter storm, combined with the winter holiday week, kept volume on the consolidated tape of the New York Stock Exchange on the light side, although it was slightly above Monday's sluggish levels. As of 11:15 a.m., 675 million shares changed hands.
A survey by the International Council of Shopping Centers and Goldman Sachs found chain store sales in the week ended Dec. 25 rose 4.8 percent from the same period a year earlier, the best gain since April, and putting retail sales on track to rise 4 percent in November and December.
Retailers, however, slumped Tuesday as Monday's heavy snow fall continued to keep consumers away. Department store retailers Saks , JC Penney , and Nordstrom's declined, as did many apparel stores, including Pacific Sunwear , Limited Brands , and J Crew .
In U.S. economic news, the Conference Board's index of consumer confidence fell to 52.5 in December from a revised 54.3 in November, and less than the reading of 56 expected by economists. The survey showed consumers remain concerned about the weak job market.
The Standard & Poor's/Case-Shiller 20-city home price index fell 1.0 percent in October from September, as home prices continued to fall broadly. Economists surveyed by Reuters had expected the index to fall only 0.6 percent. The 20-city composite index fell 0.8 percent in October from a year earlier.
“The double-dip is almost here, as six cities set new lows for the period since the 2006 peaks," David M. Blitzer, chairman of the index committee at S&P, said in a statement. "There is no good news in October’s report. Home prices across the country continue to fall.”
The U.S. 30-year Treasury bond fell a point, sending it's yield up to 4.7 percent, after the disappointing consumer confidence news. The U.S. Treasury will auction $35 billion in five-year notes at 1 p.m.
Prices could get a boost over the next two days as the Federal Reserve buys $10 billion to $14 billion as part of its Permanent Open Market Operations to drive down rates and boost liquidity.
In other news, President Barack Obama is expected to announce his choice for the White House's top economic advisor on his return from the holiday break.
European shares were mostly higher with health care and technology stocks leading the gains. Volumes were also light with the UK market closed for a public holiday. The French market was higher despite the country's gross domestic product growth for the second and third quarter being revised down slightly.
Asian indexes closed with many investors taking profits in the wake of China's interest rate hike over the weekend.
The Nasdaq OMX Group will again attempt to establish a market in Japan with the Osaka Securities Exchange, according to a report
On Tap For Next Week:
TUESDAY: 5-year Treasury note auction.
WEDNESDAY: MBA mortgage applications, oil inventories, 7-year Treasury note auction.
THURSDAY: Jobless claims, Chicago PMI, pending home sales, farm prices, money supply, Massey CEO Blankenship retires.
FRIDAY: No major economic data expected.
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