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Stocks sink as consumer spending worries deepen

By Ken Sweet
Associated Press

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NEW YORK: After eight consecutive weeks of gains, the stock market pullback long anticipated by investors might have arrived.

Stocks fell Tuesday, dragged lower by the Detroit automakers and consumer-focused companies such as GameStop and Amazon.com. The market could be headed for its first weekly decline since early October, putting at risk a rally that has sent indexes to record highs.

The declines do not come as a surprise to large investors, many of whom have predicted a pullback. The Standard & Poor’s 500 index has surged 26 percent in 2013, on track for its best year in a decade.

If stocks paused, declined or even entered a “correction,” a Wall Street term for when an index falls 10 percent or more, it would be normal after eight consecutive weeks of gains.

“The markets may have stalled out here, but that must be taken in the context of what has been a great year,” said Alec Young, global equity strategist with S&P Capital IQ.

The Dow Jones industrial average lost 94.15 points, or 0.6 percent, to 15,914.62. The S&P 500 index fell 5.75 points, or 0.3 percent, to 1,795.15 and the Nasdaq composite fell 8.06 points, or 0.2 percent, to 4,037.20.

Companies that depend heavily on consumer spending had some of the biggest losses. GameStop, the video game retailer, sank $1.02, or 2 percent, to $45.95, one of the worst declines in the S&P 500 index. Amazon.com fell $7.64, or 2 percent, to $384.66.

Automakers fell. General Motors lost 97 cents, or 3 percent, to $38.14. Ford fell 50 cents, or 3 percent, to $16.56, despite what auto industry analysts considered mostly positive sales reports for November.

“When you look at how markets have performed this year, some investors may have decided to cash in, put their feet up and drink eggnog,” said Lawrence Creatura, a portfolio manager with Federated Investors.

On Friday, the government will release its monthly job market survey. Economists expect that employers created 180,000 jobs last month while the unemployment rate remained steady at 7.2 percent, according to FactSet, a financial information provider.

A key worry for investors is how willing U.S. consumers are to spend during the holiday shopping season, which is just getting underway.

A record number of people shopped over the four-day Thanksgiving weekend, the National Retail Federation said Monday. However, the average amount spent by each shopper fell compared with the same period last year. It was the first decline since the trade group began tracking the figures in 2006.

In company news:

• Yum Brands fell $2.10, or 3 percent, to $75.61. The owner of KFC and Taco Bell said sales in China, a key market for the company, have been sluggish because of concerns among Chinese customers about food safety.

• Abercrombie & Fitch rose $1.97, or 6 percent, to $35.99. The stock of the teen clothing store owner rose after an activist shareholder, Engaged Capital, sent a letter to the company demanding that CEO Michael Jeffries be replaced.


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