Traders on the floor of the New York Stock Exchange.(Photo: Richard Drew, AP)
NEW YORK -- Key stock indexes fell Thursday as a pair of U.S. retail giants posted better-than-expected profits, but revenue that fell just short.
The Dow Jones industrial average ended down 0.2%, falling 29 points to finish at 12,542. Slipping 0.3% and 0.2% were the Nasdaq composite and the S&P 500, respectively.
Most investors continue to be focused on the threat of going over the so-called "fiscal cliff" by year's end and the a recession in the eurozone three years into its debt crisis.
World stocks fell Thursday as hopes began to fade for a quick agreement among U.S. leaders to avoid a "fiscal cliff" that could derail the U.S. economy. A widely predicted leadership change in China didn't appear to impact Asian stock markets.
Unless President Obama and Congress reach a compromise, a series of expiring tax cuts and across-the-board spending reductions will take effect in 2013 at a cost of about $800 billion. Economists say that it would knock the economy back into recession.
In Europe, Britain's FTSE 100 ended the day down 0.8% to 5,677.75. Germany's DAX finished down 0.8% to 7,043.42. France's CAC-40 closed 0.5% lower at 3,382.40.
Also Thursday, the Labor Department also reported a surge in unemployment benefit applications due largely to the havoc from Superstorm Sandy in Northeast states.
The government also reported that inflation remains in check: The Consumer Price index rose 0.1% in October, bringing the rise in the closely watched gauge of inflation for consumers to 2.2% the past 12 months.
Wal-Mart shares (WMT) ended the day down 3.6% after its expectations for the current quarter fell shy of Wall Street expectations. An investigation into bribery allegations in Mexico also may be expanding to a number of other countries.
In a filing with the U.S. Securities Exchange Commission Thursday, Wal-Mart said that "inquiries or investigations regarding allegations of potential (U.S. Foreign Corrupt Practices Act) violations have been commenced in a number of foreign markets where we operate, including but not limited to Brazil, China and India."
Superstorm Sandy drove the number of people seeking unemployment benefits up to a seasonally adjusted 439,000 last week, the highest level in 18 months, the Labor Department said.
The storm struck the East Coast on Oct. 29 and left wide swaths of damage from North Carolina to Maine. The storm also cut power to roughly 8 million homes and businesses, and some are still without power.
Retailers in the region were also affected and most closed stores at some point.
Target (TGT) reported a higher profit for the third quarter. Target said that comparable store sales rose 2.9%, which was a slower growth rate than last year.
Benchmark oil for December delivery ended down $1 even, or 1.2%, to $85.32 in electronic trading on the New York Mercantile Exchange. The price of gold finished $17.30 lower, or 1%, to $1,717.20.
The yield on the 10-year U.S. Treasury note held steady at 1.59%. In currencies, the euro rose to $1.2776 from $1.2745 Thursday. The dollar rose to 81.19 yen from 80.17 yen.
In Asia, as expected, Xi Jinping secured the top spot in the Communist Party on Thursday, replacing outgoing leader Hu Jintao. Xi was introduced as general secretary at Beijing's Great Hall of the People, a day after the close of a party congress that underlined the communists' resolve to hold on to power.
Hong Kong's Hang Seng tumbled 1.6% to 21,108.93. Benchmark indexes in Singapore, Taiwan and Thailand also fell.
In mainland China, the Shanghai Composite Index lost 1.2% to 2,030.29, the lowest close in more than a month.
Japanese stocks were kept buoyant by a weakening yen and reports that Japanese parliamentary elections have been set for Dec. 16. The Nikkei 225 index rallied 1.9% to close at 8,829.72 after Prime Minister Yoshihiko Noda reportedly pledged to dissolve the parliament by Friday if the opposition agreed to key reforms.
"Japan is up today because of the announcement of an election date in the hope that there may be some more stimulatory policies as a result of that," said Peter Elston, strategist at Aberdeen Asset Management in Singapore.