By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks declined Monday as U.S. lawmakers readied to take up the so-called fiscal cliff and as euro-zone finance ministers met to discuss the next aid tranche for Greece.
"It's like coming back to earth in terms of reality sinking back in. We started this with a lot of good feelings and nice words, but coming to a real deal is a lot harder," Bill Stone, chief investment strategist at PNC Asset Management Group, said of U.S. efforts to reach a budget deal.
"We wouldn't be surprised if we don't get a deal until next year, though no doubt they are going to try. But they are further away than the early good rhetoric would have made you feel," Stone said.
The Dow Jones Industrial Average (DJI) fell 77.02 points, or 0.6%, to 12,932.66, with all but three of its 30 components in retreat.
UnitedHealth Group Inc. (UNH) fell 1.7% after the insurer and Dow component projected 2013 profit beneath Wall Street estimates.
The S&P 500 index (SPX) declined 7.06 points, or 0.5%, to 1,402.09, with energy and telecom declining the most among the 10 major industry groups and utilities the best performer.
The Nasdaq Composite (RIXF) lost 3.69 points, or 0.1%, to 2,963.16.
For every five stocks that rose, nine fell on the New York Stock Exchange, where 155 million shares traded as of 10:50 a.m. Eastern time. Composite volume exceeded 768 million.
Congress returns to Washington this week after the Thanksgiving break, with lawmakers looking to reach an agreement to avert more than $600 billion in automatic tax hikes and spending reductions next year.
David Kelly, chief global strategist at J.P. Morgan Funds, believes a deal will be reached before Christmas, but until then, markets will be in the dark on the impact on tax rates and the economy, an uncertainty he says is "restraining gains in economic activity, stock prices and interest rates."
"Once the fiscal fog clears, all three could move higher, suggesting that this probably remains a time to be a little overweight risk assets," Kelly wrote in a research note.
In an unexpected development, Bank of Canada Gov. Mark Carney on Monday was appointed the next head of the Bank of England. Carney, the current head of the Group of 20's Financial Stability Board, succeeds Mervyn King at the helm of the central bank.
In Brussels, euro-zone finance ministers are meeting again in an effort to release another rescue payment to Greece after failing to do so in two other attempts this month.
The simplest and cheapest solution to Greece's debt fiasco is for European government to give it enough money to get its economy growing again in the short term in exchange for long-term fiscal reforms, Kelly said.
"The cost of not lending Greece money appears too high for the Europeans to refuse to do so. However, loans in return for additional austerity in an already disastrous economy is simply the wrong policy," he wrote.
U.S. consumers were active during the long weekend, giving retailers a robust beginning to the holiday-shopping season, according to data released Sunday afternoon.
On Friday, Wall Street gained for a fifth session, with the S&P 500 index advancing 3.6% on the week, as some analysts theorized the Thanksgiving-week rise as setting the stage for a end-of-year rally.
"As we all know, stock prices have a tendency to do well this time of year. Sometimes rising stock prices during the week of Thanksgiving set the stage for a year-end rally. I'm still expecting one this year," Ed Yardeni, chief investment strategist at Yardeni Research Inc., wrote in a note.
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