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Stocks tumble amid budget debate, Middle East conflict

Concerns about the possible resolution to the "fiscal cliff" helped push stock prices sharply lower again on Wednesday.

The Dow Jones Industrial Average fell 185.23 points to 12,570.95, the third triple-digit decline since the election. The Nasdaq Composite Index dropped 37.08 points to 2,846.81, and the S&P 500 Stock Index was off 19.04 points to 1,355.49.

Two economic reports reflected the recent drop in energy prices and effects of Hurricane Sandy. Retail sales fell 0.3 percent as consumers along the Eastern Seaboard were impacted by the arrival of the superstorm. A drop in gasoline prices resulted in a drop in the producer price index, down 0.2 percent.

Oil prices were up 94 cents to $86.32 a barrel on new tensions in the Middle East. Crude had traded as low as $84.93 earlier in the session. Gold was up $5.30 to $1,730.10 an ounce.

Federal Express Corp. (NYSE: FDX) and Boeing Co. (NYSE: BA) slumped at least 2.8 percent. Bank of America Corp. (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) dropped more than 1.8 percent as financial shares sank. Cisco Systems Inc. (Nasdaq: CSCO) jumped 4.8 percent after earnings topped estimates. Facebook Inc. (Nasdaq: FB) soared 13 percent as investors were undeterred by a surge in the number of tradeable shares after a lockup period expired.

“The recent wall of worry continues to mount,” said Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc. His firm oversees $250 billion. “Middle East geo-political tensions, continued sovereign concerns about Greece and Spain, indecision ahead of the fast-approaching fiscal cliff and the fact that the major U.S. indices continue to trade under key technical levels are all weighing on sentiment.”

The S&P 500 has fallen 5.1 percent since President Barack Obama’s re-election set up a budget showdown with the Republican-controlled House of Representatives.

Obama is negotiating to reach a deficit-reduction deal with Congress to avert $607 billion in automatic tax increases and spending cuts, or the so-called fiscal cliff. He said in a White House news conference that voters sent a “very clear message” on Nov. 6 that they want both parties to stop bickering over politics and take the necessary steps to cut the budget deficit through a combination of tax increases for the wealthy and cuts in spending.

Home Depot Inc. (NYSE: HD) fell 3 percent to $61.47. The company retreated after reaching the highest level since 2000 Tuesday as profits beat estimates. The stock was downgraded to the equivalent of hold by analysts at Gabelli & Co. and Raymond James & Associates Inc. (NYSE: RJF).

Advanced Micro Devices Inc. (NYSE: AMD) fell 7.7 percent to $1.93, after a 5 percent rally Tuesday. The company said it isn’t actively pursuing a sale of the company or a significant sale of assets.

Mosaic Co. (NYSE: MOS) fell 3.3 percent to $49.10. The fertilizer producer may further reduce its output of potash amid lower-than-expected global demand for the crop nutrient, Chief Financial Officer Larry Stranghoener said Wednesday. The company Tuesday cut its fiscal second-quarter forecast for potash and phosphate shipments as international buyers delay purchases.

Monster Worldwide Inc. (NYSE: MWW) retreated 5 percent to $5.93. The company may fail to cement a deal after suitors such as TPG Capital and Apollo Global Management LLC (NYSE: APO) passed, said two people familiar with the matter.

Juniper Networks Inc. (NYSE: JNPR) the second-largest maker of networking gear, added 1.2 percent to $17.55. F5 Networks Inc. (Nasdaq: FFIV) gained 1.1 percent to $87.50.



Bloomberg News contributed to this report.



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