NEW YORK - Stock indexes closed lower Thursday, a third straight decline, after U.S. retailers issued weak forecasts for earnings and more people filed claims for unemployment benefits.
The Dow Jones Industrial Average wavered between small gains and losses shortly after the opening bell, then moved lower in midmorning. It closed down 28.57 points at 12,542.38. The Standard & Poor's 500 index dropped 2.16 points to 1,353.33, and the Nasdaq composite finished 9.87 points lower at 2,836.94.
Stocks have fallen steadily since voters returned President Barack Obama and a divided Congress to power. The Dow has lost 5 percent from Election Day, Nov. 6.
Investors worry that U.S. leaders may not reach a deal before tax hikes and government spending cuts take effect Jan. 1. The impact would be $700 billion for 2013 and could send the country back into recession.
Bill Stone, chief investment strategist at PNC Asset Management Group in Philadelphia, said the bargaining in Washington would likely drag on until next year, weighing on stocks. "It's hard to see the market getting a whole ton of traction until that gets settled," he said.
T. Dale, a portfolio manager at Security Ballew Wealth Management in Jackson, Miss., said that stocks are more likely to fall than rise, partly because of slowing global economic growth and the U.S. budget impasse.
"The market has gotten well ahead of itself," Dale said.
Hurricane Sandy drove up the number of people seeking unemployment benefits up 439,000 last week, the Labor Department reported. Applications for benefits rose 78,000, mostly because a large number were filed in storm-damaged states.