This Is the Reason the S&P 500 Was Grinched


It doesn't appear that even a visit by old St. Nick is going to be enough to save the economy from going over the fiscal cliff in just five more days. According to MasterCard Advisors Spending Pulse, holiday sales from Oct. 28 through Dec. 24 rose a paltry 0.7%, compared to estimates that ranged from between 3% and 4%. This would mark the slowest period of retail sales growth since the U.S. was in a deep recession in 2008, and speaks to the tightening budgets many are dealing with, as we prepare for higher taxes and deep federal spending cuts.

On the day, the broad-based S&P 500 fell 6.83 points (-0.48%), to finish at 1,419.83.

As you might expect from the above holiday sales figures, retailers were the biggest losers within the S&P 500 today. In fact, 10 of the 11 biggest losers within the S&P 500 were retailers in one form or another, including purse and accessories maker Coach , down 5.9%, e-commerce giant , off 3.9%, and high-end jewelry chain Tiffany , losing 2.8%.

The signs are there that retailers could be in for a very rough 2013 given existing weakness in Europe and a slowdown of growth in China, coupled with a soon-to-be spike in household taxes if no fiscal compromise is reached. This means that higher-end retailers, like Tiffany and Coach, as well as bargain shoppers looking for great deals on Amazon, could be dealing with less discretionary income.

There weren't many bright spots today, but Bank of America , which rose 2.6% and hit a 52-week intraday high, was a notable exception. As the best performer in the Dow Jones Industrial Average in 2012, a mixture of window dressing and value -- it still trades at just 57% of book value -- the company appears to be luring investors into the bank. With a freshly capitalized portfolio, thanks to asset divestments, Bank of America's run may not be over just yet.

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Fool contributor Sean Williams owns shares of Bank of America, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of MasterCard, Coach,, Tiffany, and Bank of America. Motley Fool newsletter services have recommended buying shares of Coach and Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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