Stocks edge lower; Apple extends decline

NEW YORK (AP) ? Stocks edged lower on Wall Street Tuesday as tensions flared in Washington over increasing the country's borrowing limit.

Treasury Secretary Timothy Geithner told congressional leaders in a letter late Monday that the U.S. government will reach its borrowing limit as soon as mid-February, earlier than expected. Federal Reserve Chairman Ben Bernanke also commented on the issue Monday, saying it was one of the "critical fiscal watersheds" for the government in coming weeks.

The Dow Jones industrial average fell 11 points to 13,495 as of 1:52 p.m. EST, having been down as much as 61 points in early trading. The Standard and Poor's 500 dropped two points to 1,468, the Nasdaq composite index fell 13 points to 3,105.

President Barack Obama has criticized congressional Republicans for linking talks over raising the debt ceiling to ongoing budget negotiations. Obama said the consequences of the U.S. government defaulting on its debt would be disastrous and shouldn't be used as a bargaining chip to extract concessions on spending cuts.

"We are very concerned how the market is going to respond to all the news events that will be coming out of Washington over the next few months," said Eric Wiegand, a senior portfolio manager at U.S. Bank Wealth Management. "It really comes down to the uncertainty and the risk of a further downgrade of our debt."

Markets were roiled in the summer of 2011 as lawmakers haggled over an increase to the debt limit. The dispute cost the U.S. its AAA ranking from the credit-rating firm Standard and Poor's.

The U.S. fiscal crisis is still the biggest single individual risk facing investors, with 37 percent of investors naming it as the biggest worry, according to a survey of fund managers published by Bank of America Merrill Lynch Tuesday. The European debt crisis was cited as the biggest concern by 23 percent of those polled and a "hard landing" for the Chinese economy was third on the list with 12 percent.

Apple fell $14 to $487.50, its third daily drop. The stock hasn't closed below $500 in almost a year. Apple slumped 3.6 percent Monday on concern that demand for its iPhone 5 is slowing. Nomura analysts today lowered their target price for the stock to $530 from $660 and cut their estimates for iPhone sales this year.

Stocks dropped Tuesday despite a report that retail sales increased in December. Consumers bought more autos, furniture and clothing, despite worries about potential tax increases. Sales rose 0.5 percent in December from November, slightly better than November's 0.4 percent increase and the best showing since September, the Commerce Department said Tuesday.

Investors may be more concerned about January's retail figures now that the increase in the Social Security payroll tax has come into effect, said Doug Cote, chief market strategist at ING Investment Management.

The tax jumped back to 6.2 percent earlier this month after President Barack Obama failed to win renewal of the temporary 2 percentage point payroll tax cut that's been in place for two years, as part of a deal that stopped the U.S. going over the "fiscal cliff."

"The market is kind of looking past it because of the change in the tax regime," said ING's Cote. "Are consumers going to be able to spend like they did in December and in earlier years? ... I think not."

The outlook for manufacturing in New York state worsened in January, according to survey by the Federal Reserve Bank of New York. The bank's Empire State Manufacturing Survey produced a reading of minus 7.8 for the month, indicating contraction.

Both the S&P 500 and the Dow are up on the year, having surged in the first week of January after lawmakers reached a last-minute budget deal to stop the economy going over the "cliff." The agreement prevented a series of tax increases and spending cuts that would probably have pushed the U.S. economy back into recession, according to economists.

Optimism about the outlook for global growth has also boosted stocks.

The S&P 500 is up 2.9 percent this year and closed at a five -year high of 1,472 last week. The 30-member Dow is up 3 percent since the start of 2013.

The yield on the 10-year Treasury price, which moves inversely to its price, fell 1 basis point to 1.83 percent.

Among other stocks making big moves;

? United Continental Holdings, the airline operator, fell 10 cents to $25.89 after JPMorgan cut its rating on the company to "neutral" from "overweight" to reflect the fact that the stock has already risen 40 percent in the past 12 months.

? Lululemon Athletica, a maker of yoga apparel, dropped $3.15 to $69.17 after its revenue forecast fell short of analysts' estimates.

? Given Imaging Ltd. fell $2.16 to $16 after the medical equipment company said it was no longer considering a sale. Also one of its largest shareholders plans to sell its stake.

? Facebook fell 51 cents to $30.42, paring its gains for the year to 14 percent, after the company unveiled a new search feature on Tuesday that lets users search their social connections for information about people, interests, photos and places.

Source: http://news.yahoo.com/stocks-edge-lower-apple-extends-decline-153848956--finance.html

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