After showing a lack of direction throughout much of the trading day on Wednesday, stocks came under pressure in the latter part of the session. Profit taking following recent strength contributed to the pullback by the markets.
The major averages moved notably lower going into the close, ending the session at their worst levels of the day. The Dow fell 98.99 points or 0.7 percent at 13,251.97, the Nasdaq dipped 10.17 points or 0.3 percent to 3,044.36 and the S&P 500 slid 10.98 points or 0.8 percent to 1,435.81.
The pullback by stocks came on the heels of the strong gains posted in the two previous sessions, which lifted the major averages to their best closing levels in about two months.
Continued uncertainty about the looming fiscal cliff also generated some selling pressure, with remarks by President Barack Obama and House Speaker John Boehner suggesting that an agreement might not be as close as it appeared earlier this week.
Speaking to reporters, Obama was highly critical of Boehner's proposed "Plan B" legislation, which would extend tax cuts for people making up to $1 million.
Boehner unveiled the "Plan B" proposal on Tuesday as an alternative if lawmakers are unable to reach a broader budget agreement.
Obama claimed that the legislation continues large tax cuts for the very wealthiest individuals while raising taxes on millions of working families.
Later in the day, Boehner said the House will pass the bill on Thursday and argued that the president would be responsible for the largest tax increase in American history if he can't persuade Senate Democrats to approve the legislation.
On the economic front, the Commerce Department released a report showing that U.S. housing starts came in below economist estimates in November.
The report said housing starts fell 3.0 percent to an annual rate of 861,000 in November from the revised October estimate of 888,000. Economists had expected housing starts to fall to 865,000 from the 894,000 originally reported for the previous month.
At the same time, the Commerce Department said building permits rose 3.6 percent to an annual rate of 899,000 in November from the revised October rate of 868,000. With the increase, building permits reached their highest annual rate since July of 2008.
Despite the notable pullback by the broader markets, most of the major sectors ended the day showing relatively modest moves.
Telecom stocks saw considerable weakness, however, with the NYSE Arca Telecom Index falling by 1.2 percent. Frontier Communications (FTR) turned in one of the sector's worst performances.
Gold, retail, and utilities stocks also moved to the downside on the day, although selling pressure was relatively subdued.
On the other hand, airline stocks saw considerable strength, driving the NYSE Arca Airline Index up by 2.1 percent to its best closing level in over a year.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index surged up by 2.4 percent, while Hong Kong's Hang Seng Index rose by 0.6 percent.
The major European markets also moved to the upside on the day. While the German DAX Index edged up by 0.2 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both rose by 0.4 percent.
In the bond market, treasuries regained some ground after falling rather sharply in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.7 basis points to 1.80 percent.
Several key U.S. economic reports are scheduled to be released on Thursday, including reports on weekly jobless claims, existing home sales, and Philadelphia-area manufacturing activity.
Nonetheless, the data is likely to be overshadowed by any developments in Washington regarding the fiscal cliff negotiations.
by RTT Staff Writer
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