Wall Street down as "fiscal cliff" scares investors away

By Angela Moon
NEW YORK | Tue Nov 27, 2012 10:25pm IST
(Reuters) - Stocks fell on Tuesday as worries over the impact of "fiscal cliff" on the economy overshadowed progress in easing Greece's debt burden and a slew of positive U.S. economic data.
A deal in Europe to release emergency aid to debt-laden Greece gave a brief, early lift to stocks, but the news was not enough to sustain the gains as investors confronted the looming "fiscal cliff" at home.
As Democrats and Republicans prepared to resume efforts to bridge their sharp differences over taming the federal debt this week in Washington, the market resumed its cautious mode.
"It's like there is nothing else but the fiscal cliff now. It is too big of an issue both economically and politically for investors to just brush off," said Jack DeGan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.
The market's worry is whether Congress and the White House can agree on ways to avoid some $600 billion in automatic spending cuts and tax increases that are due to kick early next year. Some fear dramatic fiscal restraint could send the economy into recession.
"It's hard for markets to move on fundamentals now. Even if they do, they quickly come back to being cautious. Investors may buy on small dips but they don't stay in that position for long," DeGan said.
Market reaction was muted to data that showed Americans' confidence in November hit the highest level in more than four years and home prices in September rose for an eighth straight month.
In addition, a gauge of planned U.S. business spending increased by the most in five months in October, data on durable goods orders showed.
The Dow Jones industrial average .DJI was down 37.35 points, or 0.29 percent, at 12,930.02. The Standard & Poor's 500 Index .SPX was down 2.75 points, or 0.20 percent, at 1,403.54. The Nasdaq Composite Index .IXIC was down 4.21 points, or 0.14 percent, at 2,972.58.
As of Monday's close, the S&P 500 was holding above the 1,400, the level it reclaimed last week. But volume continued to be weak as traders awaited any progress to avert the fiscal restraint. Last week, the S&P 500 advanced nearly 4 percent.
Among individual stocks, Corning Inc (GLW.N) shares rose 6.3 percent to $12.07 after the specialty glass maker said it expects full-year sales of its Gorilla glass, used in smartphones and tablets, to approach $1 billion.
McMoRan Exploration Co (MMR.N) shares tumbled 22 percent to $7.55 after the oil and gas explorer said on Monday that it could not achieve a measurable flow test at its key Davy Jones No. 1 well in the Gulf of Mexico.
(Reporting By Angela Moon; Editing by Theodore d'Afflisio and Kenneth Barry)