* Retail stocks among S&P 500's biggest decliners
* S&P/Case-Shiller data tops expectations
* Obama heads back to Washington after vacation
* Indexes down: Dow 0.3 pct, S&P 0.5 pct, Nasdaq 0.7 pct
By Ryan Vlastelica
NEW YORK, Dec 26 (Reuters) - U.S. stocks fell on Wednesday,
dragged lower by retail stocks after a report showed consumers
were less enthusiastic about the holiday shopping season than
Many investors said concerns about the "fiscal cliff" kept
shoppers away from stores, suggesting markets may struggle to
make any ground until next year.
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 1.5 percent to 61.24.
"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
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 economy into recession if it
Coach Inc fell 6 percent to $54.08 as the biggest
decliner on the S&P 500, followed by Ralph Lauren Corp,
off 4 percent to $144.99. Online retailer Amazon.com
fell 3.1 percent to $250.52. Gamestop Corp, Urban
Outfitters and Abercrombie & Fitch were also
among the S&P's biggest decliners.
The Dow Jones industrial average was down 34.16
points, or 0.26 percent, at 13,104.92. The Standard & Poor's 500
Index was down 6.57 points, or 0.46 percent, at 1,420.09.
The Nasdaq Composite Index was down 18.82 points, or
0.62 percent, at 2,993.78.
Volume was light, with only 2.17 billion shares having
traded at midday on the New York Stock Exchange, the Nasdaq and
the NYSE MKT. Many senior traders were still on vacation during
this holiday-shortened week and major European markets were
closed for the day.
Still, Wednesday marked the third day of losses for the S&P
500 in its worst three-day decline since mid-November.
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, who helps oversee about $12 billion in assets.
"Investors can easily make up for any gains when there's more
action in 2013."
The benchmark S&P 500 Index is up 12.8 percent for the year,
and has recouped nearly all of the losses after the U.S.
election, when the "fiscal cliff" concerns moved to the
forefront. This is the best yearly gain for the S&P 500 since
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
In the energy sector, China's Sinopec Group and
ConocoPhillips will research potentially vast reserves
of shale gas in southwestern China over the next two years,
state news agency Xinhua reported. Conoco's stock fell 0.8
percent to $57.99.
An outage at one of Amazon.com Inc's web service centers hit
users of Netflix Inc's streaming video service on
Christmas Eve and was not fully resolved until Christmas Day, a
spokesman for the movie rental company said on Tuesday. Netflix
rose 0.8 percent to $90.97.