Retailers lead U.S. shares lower; yen hits two-year low
By David Gaffen
NEW YORK (Reuters) - The yen fell to a two-year low against the dollar on Wednesday as Japan's new prime minister called for weakening the currency to stimulate inflation, while U.S. stocks slipped, led by declines in retailers' shares.
Sales growth at U.S. retailers was projected to have fallen short of expectations during the holiday shopping season, according to preliminary estimates from firms that track retail spending.
The S&P 500 lost 0.5 percent, with consumer discretionary stocks among the hardest-hit. The Morgan Stanley Retail index .MVR dropped 1.7 percent.
U.S. shares were also pressured as it appeared Congress will not negotiate a deal before January 1 to avoid the "fiscal cliff," a series of spending cuts and tax hikes totaling $600 billion that would slow the U.S. economy sharply unless lawmakers take action.
There was concern that potential tax hikes cut into U.S. holiday spending.
"With the 'fiscal cliff' hanging over our heads, it was hard to convince people to shop, and now it's hard to convince investors that there's any reason to buy going into year-end," said Rick Fier, director of trading at Conifer Securities in New York.
President Barack Obama was to return to Washington on Thursday, earlier than planned, from his Hawaiian holiday to resume talks.
A series of big decisions will wait until early 2013, when tax rates are scheduled to rise for most Americans. Economists warn that the world's largest economy could fall into recession as a result unless action - even retroactive - is taken to cushion the blow of higher rates and reduced spending that has helped bolster a weak economy. Continued...