Dow Falls on Slow Christmas Shopping

Stocks fluttered today in the first full day of trading this week as investors awaited further negotiations on the fiscal cliff.

The Dow Jones Industrial Average (INDEX: ^DJI  ) dropped 24 points, or 0.2%, amid the general anxiety, and retailers performed particularly poorly in response to reports of a disappointing Christmas shopping season. Trading was the lightest it's been in any full session this year, as many on Wall Street were still on vacation and European markets were closed for Boxing Day.

According to the MasterCard Advisors SpendingPulse, holiday season sales grew at the slowest pace since the recession-mired 2008 season. Overall retail sales in the two months leading up to Christmas grew just 0.7%, well below analyst expectations of 3% to 4%. Some observers blamed the worries about the fiscal cliff as well as Superstorm Sandy, which could have led some shoppers to cut back on gift buying.

President Obama is set to return to Washington tomorrow, cutting his Christmas vacation short to get back to work on the fiscal cliff. The president seems to be aiming for a stopgap measure to prevent taxes from jumping on the middle class rather than the "grand bargain" that some had hoped for just a week ago. The Republican-led House, meanwhile, has no plans to reconvene, and could not get back to work until Friday night at the earliest.

There was one piece of good news in today's economic reports. The Case-Shiller 20-City Index showed that housing prices jumped 4.3% over the year ending in October, the biggest gain in over two years. That figure provided further evidence of the improving housing market and helped drive Bank of America (NYSE: BAC  ) , which counts mortgages as a large part of its business, to be the Dow's big winner, climbing 2.6% today. Other investors seem to be piling on to B of A as it seems to finally have emerged strong and healthy after the doldrums of the financial crisis. Shares have more than doubled this year.

Aluminum maker Alcoa (NYSE: AA  ) also gained 1.3% on a report from Bloomberg that says futures on the commodity are expected to rise as much as 16% in spite of a supply glut. The reason for the disparity appears to be the lag in getting aluminum from warehouses. Alcoa also signed a contract with Siemens Energy on Monday, though terms were not disclosed.

Leading the losers, UnitedHealth (NYSE: UNH  ) fell 1.2% on concerns about Obamacare as Aetna CEO Mark Bertolini warned that premiums could double in some places from the new health-care policy, though the higher prices would not benefit insurers. Investors are also worried about a cut in Medicare payments to such HMOs as UnitedHealth and Aetna.

With Bank of America's pop today, the bullish argument only seems to be getting stronger. Find out what our top financial analyst has to say about the financial titan in our new exclusive premium research report. This in-depth analysis covers the bank's opportunities and risks as well as key areas to watch going forward. Get your copy of this invaluable information now. All you have to do is click right here.


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