US STOCKS-Year's big winners slammed with little progress in DC

Reuters

(Corrects paragraph 4 to show best stocks on Nasdaq 100 and S&P500)

* Profit-taking hits 2013's best performing stocks; techsdown

* Obama shows flexibility on short-term debt limit hike

* Boehner: There's no line in the sand

* Indexes down: Dow 0.51 pct, S&P 0.65 pct, Nasdaq 1.34 pct

By Julia Edwards

NEW YORK, Oct 8 (Reuters) - U.S. stocks dipped on Tuesday,with the year's biggest gainers taking the hardest hits, as thelack of tangible signs of resolution of the fiscal crisis inWashington prompted a flurry of selling.

The technology sector was the biggest loser on the S&P 500,with investors seeming to target stocks that have outperformedthroughout the year and even held up well as the broader markethas come under pressure in the last couple of weeks.

"Given all the uncertainty and anxiety about what couldhappen with the debt ceiling, investors want to take profits,and these are the ones that have seen some of the biggest gainsthis year," said Donald Selkin, chief market strategist atNational Securities in New York, which has about $3 billion inassets under management.

Facebook was the biggest drag on the Nasdaq, down 3.4percent to $48.38. Shares of TripAdvisor lost 6 percentto $71.35 a share, and Netflix fell 4.8 percent to$303.11. Both TripAdvisor and Netflix are among the topperformers this year on the S&P 500, and Facebook is among thetop performers on the Nasdaq 100.

"All of the sudden, you've got these question marks comingin from earnings reports and the government shutdown and you'vegot these portfolio managers saying, 'What is left here for meto keep my neck out? Why not take some profit?'" said DanielMorgan, senior portfolio manager at Synovus Trust Company inAtlanta.

The Dow Jones industrial average was down 76.67points, or 0.51 percent, at 14,859.57. The Standard & Poor's 500Index was down 10.86 points, or 0.65 percent, at1,665.26. The Nasdaq Composite Index was down 50.51points, or 1.34 percent, at 3,719.87.

Republican House Speaker John Boehner renewed calls toPresident Barack Obama to have a conversation with his party ata press conference on Tuesday morning. Boehner, flanked byRepublican leadership, said "there is no line in the sand" drawnby his party over fiscal negotiations.

With the partial U.S. government shutdown in its second weekand only nine days left for Congress to raise the U.S. debtceiling, President Barack Obama said he would accept ashort-term increase to avoid a default.

A Senate aide said Republican Senator Rob Portman, who is influential on budget matters, floated a plan to cut federalspending and reform the U.S. tax code as part of a broader dealto reopen government agencies and raise the debt ceiling.

The longer the government shutdown continues, the greaterthe damage to the economy, according to analysts, increasing theprobability the Federal Reserve will leave its stimulus measuresin place.

After Tuesday's market close, former Dow component Alcoa Inc will report earnings, as will KFC parent company Yum!Brands Inc.

McKesson shares rose 4.3 percent to $135.23 as thebest performer on the S&P 500 after Dow Jones Newswires reportedthe company was in advanced talks to take over Celesio in a possible 3.74 billion euro ($5.08 billion) deal.

J.C. Penney Co Inc rose 4.2 percent to $8.03 afterthe struggling retailer reported a smaller decline in same-storesales for September compared with August and said it was seeingpositive signs in many areas of its business. (Editing by Nick Zieminski)

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