Stocks slide as impasse over budget deficit looms

On Wednesday, the Dow dropped 185.23 points, or 1.5 percent, to 12,570.95. The S&P fell 19.04 points, or 1.4 percent, to 1,355.49, and the Nasdaq composite declined 37.08 points, or 1.29 percent, to 2,846.81.

Indexes are still up on the year, though they have pared gains since reaching four-year highs. The S&P has fallen 7.5 percent since its Sept. 14 peak, and the Dow has fallen 7.6 percent, more than 1,000 points, since its Oct. 5 peak.

Among individual stocks, Abercrombie & Fitch, which sells teen clothes, bucked the trend of a declining market and was by far the best-performing stock in the S&P 500.

Abercrombie jumped $10.54 to $41.92 after reporting that its international business was thriving and that its net income soared 40 percent in the most recent quarter, more than financial analysts were expecting.

The Commerce Department said that Americans cut back on spending in October, suggesting that many are still cautious about the economy.

Sales dropped 0.3 percent last month after three months of gains. That was worse than analysts had been expecting, according to FactSet, a provider of financial data.

The government also said auto sales fell 1.5 percent, the most in more than a year. Sales may have been hurt by Superstorm Sandy.

The Federal Reserve released minutes of its October meeting and suggested that it may replace a soon-to-end program of buying U.S. government bonds to lower long-term interest rates and spur job growth.

Under an existing program, known as Operation Twist, the Fed has been selling $45 billion a month in short-term Treasurys and using the proceeds to buy an equal amount of longer-term securities.

The Fed minutes showed support among “a number of” Fed policymakers to replace Twist with another program of long-term bond purchases when it ends in December.

The purchases are intended to lower long-term borrowing rates to encourage spending and strengthen the economy. The hope is that more hiring would follow. The yield on the 10-year Treasury note was unchanged at 1.59 percent.

Among other stocks making big moves:

• Cisco Systems, the world’s largest maker of computer networking equipment, gained 81 cents, or 4.8 percent, to $17.66. Cisco said late Tuesday that its earnings rose 18 percent in the latest quarter and that U.S. companies are starting to spend again.

• Mosaic, a company that mines for potash, a key ingredient in fertilizers, slipped $1.65, or 3.3 percent, to $49.10 after saying that international demand for its product had weakened and that it was lowering its sales forecasts.

• Advanced Micro Devices, a chipmaker, slumped 16 cents, or 7.7 percent, to $1.93 after the company denied a report that said it was considering a sale. The stock has lost about 77 percent since March because of dwindling sales.

Story Continues →

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.