DJI - NEW YORK, Dec 26 (Reuters) - U.S. stocks fell for a third straight day on Wednesday, dragged lower by retail stocks after a report showed consumers spent less in the holiday shopping season than last year.
Trading was light, with volume at a mere 4.01 billion shares traded on on the New York Stock Exchange, the Nasdaq and NYSE MKT, well below the daily average so far this year of about 6.48 billion shares. The day's volume was the lightest full day of trading so far in 2012. Many senior traders were still on vacation during this holiday-shortened week and major European markets were closed for the day.
Many investors said concerns about the "fiscal cliff" kept shoppers away from stores, suggesting markets may struggle to gain any ground until that issue is resolved. The CBOE Volatility Index or VIX, Wall Street's favorite barometer of investor anxiety, rose 4.46 percent, closing above 19 for the first time since Nov. 7.
A number of 2012's strongest performers advanced, a sign that portfolio managers may be engaging in "window dressing," a practice where market participants buy securities with big gains to improve the appearance of their holdings before presenting the results to clients. Bank of America Corp , which has more than doubled in 2012, added 2.6 percent to $11.54 on Wednesday.
Holiday-related sales rose 0.7 percent from Oct. 28 through Dec. 24, compared with a 2 percent increase last year, according to data from MasterCard Advisors SpendingPulse. The Morgan Stanley retail index skidded 1.8 percent while the SPDR S&P Retail Trust slipped 1.7 percent.
"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, which has about $12 billion in assets under administration.
President Barack Obama is due back in Washington early Thursday for a final effort to negotiate a deal with Congress to bridge a series of tax increases and government spending cuts set to begin next week, the so-called "fiscal cliff" many economists worry could push the U.S. economy into recession if it takes effect.
The Dow Jones industrial average slipped 24.49 points, or 0.19 percent, to 13,114.59 at the close. The Standard & Poor's 500 Index shed 6.83 points, or 0.48 percent, to 1,419.83. The Nasdaq Composite Index dropped 22.44 points, or 0.74 percent, to 2,990.16.
"People want to show they own names like these, making them prime 'window dressing' candidates," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.
"Bank of America keeps going up even though it's overbought and you'd expect a pullback at these levels. No one wanted it when it was under $10 a share, but they want it now."
The S&P 500 has fallen 1.5 percent over the past three sessions, the worst three-day decline since mid-November. The Dow Jones Transportation Average , viewed as a proxy for business activity, fell 0.6 percent.
A Republican plan that failed to gain traction last week triggered the S&P 500's recent drop, highlighting the market's sensitivity to headlines centered on the budget talks.
During the last five trading days of the year and the first two of next year, it's possible for a "Santa rally" to occur. Since 1928, the S&P 500 has averaged a gain of 1.8 percent during that period and risen 79 percent of the time, according to data from PrinceRidge.
"While it's unlikely there could be a budget deal at any time, no one wants to get in front of that trade," said Conifer's Fier. "Investors can easily make up for any gains when there's more action in 2013."
Data showed U.S. single-family home prices rose in October, reinforcing the view that the domestic real estate market is improving, as the S&P/Case-Shiller composite index of 20 metropolitan areas gained 0.7 percent in October on a seasonally adjusted basis.
Decliners outnumbered advancers on the New York Stock Exchange by a ratio of about 2 to 1, while on the Nasdaq, more than five stocks fell for every three that rose.
NYMEX - SEOUL, Dec 26 (Reuters) - U.S. crude futures edged up to around $89 a barrel on Wednesday, but gains were capped by uncertainty over whether the United States will avoid a fiscal crisis, which could hit demand in the world's top consumer of oil.
CBOT Soybean - Dec 26 (Reuters) - Soybean futures on the Chicago Board of Trade fell 1 percent Wednesday on long liquidation and forecasts for favorable crop weather in South America, traders said.
- Technical selling noted as most-active March soybeans turned lower in the early minutes of trade after failing to hold support above its 200-day average at $14.40.
- Spillover weakness from declines in wheat and corn.
- Soymeal and soyoil fell in sympathy with soybeans.
- Market fell despite news that USDA confirmed sales of 115,000 tonnes of U.S. soybeans to China and another 108,000 tonnes to unknown destinations, both for delivery in 2012/13.
- USDA reported export inspections of U.S. soybeans in the latest week at 44.486 million bushels, above a range of trade estimates for 37 million to 42 million.
- The Commodity Weather Group said wet areas of Argentina were expected to turn drier in the next two weeks, easing concerns about excess moisture, while welcome rains were forecast later this week and next for central Brazil.
FCPO - KUALA LUMPUR, Dec 26 (Reuters) - Malaysian palm oil futures rose to a one month-high in light trade on Wednesday with investors turning their focus to seasonal rains that could trigger floods and curb edible oil supply in Southeast Asia.
In Malaysia, the world's No.2 producer, the weather office has issued warnings of heavy rains in the coming week that may cause floods in major oil palm growing areas that account for 75 percent of national output.
Rains and floods can disrupt logistics and harvesting, lowering high stocks and lifting prices that are on track for a yearly loss of above 23 percent -- steepest decline since the 2008 financial crisis.
"The floods will ensure that there's no major sell off in the market," said a trader with a local commodities brokerage in Kuala Lumpur.
"Everybody wants to square their books, that's why you don't see much range nowadays. I can safely say that 2,200 ringgit is already the bottom for the market."
The benchmark March contract on the Bursa Malaysia Derivatives Exchange inched up 0.1 percent to close at 2,430 ringgit ($796) per tonne, slightly lower than its intraday high at 2,440 ringgit, a level unseen since Nov 27.
Total traded volumes stood at 16,062 lots of 25 tonnes each, much lower than the usual 25,000 lots as trading activity slowed towards the end of the year.
Despite the heavy rains, palm oil is still trading at a wide discount to competing soyoil that could draw in demand from big Asian consumers like India and China next year.
This comes as the soy exporting Americas face adverse weather that can crimp the supply of oilseed available for crushing into edible oils.
"The wild card is supply in the U.S and South America -- if there is tight supply then the market will be looking forward to our production," the trader said.
"If there is any production deficit in January, February and March, the only oilseed that can provide that kind of quantity will be palm."
Malaysian palm oil exports in the first 25 days of December inched up 0.5 percent from a month ago, on higher demand from India and stronger crude palm oil exports, according to data from cargo surveyor Intertek Testing Services.
Another cargo surveyor Societe Generale de Surveillance reported a 3 percent rise in shipments for the same period.
Brent crude climbed above $109 per barrel in thin trade as investors clung to hopes U.S. lawmakers would come up with a last-minute deal to avert a looming fiscal crisis in the world's largest oil consumer.
In other vegetable oil markets, the most active May 2013 soybean oil contract on the Dalian Commodity Exchange closed 0.4 percent lower.
Regional Equties - BANGKOK, Dec 26 (Reuters) - Southeast Asian stock markets edged higher on Wednesday as plantation stocks such as PT Astra Agro Lestari Tbk and Wilmar International Ltd gained, but most markets saw weak buying interest due to the holiday season.
Singapore's Straits Times Index ended at a near 17-month high of 3,180.81 while Malaysia's Kuala Lumpur Composite Index reversed earlier losses to close 0.13 percent higher after late buying.
Indonesia also saw a late rebound, with Jakarta's Composite Index up 0.6 percent to 4,275.09, around its day's high. The Philippine Composite Index edged up 0.15 percent at 5,832.83, topping its record finish of 5,831.50 set on Dec. 11.
In relatively high trading volume, the Ho Chi Minh Stock Exchange's VN Index climbed 1.2 percent to a near four-month peak amid expectations of government moves to deal with bad debts in the banking system.
Thailand's benchmark SET index set a new 17-year closing high of 1,382.23 as investors rushed to buy equities funds which offer tax breaks towards the end of the year.
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