Stocks pulled back for just the 2nd session out of 11 (and 4th out of 20!) - losses seemed somewhat strong but that is only because we have become used to stocks up almost every day and when they fall it is of the 0.1% variety. Economic news was quite bad for a second day in a row - in the past 2 days there have been about 9 economic reports domestically and 7 could be characterized as misses. And for all that you have the most minor of pullbacks. Today's losses were not even due to the economic data (the market had been up much of the day) but due to comments from another Fed member about 'tapering' of QE purchases in the future - this is going to be a running theme go forward. The S&P 500 fell 0.5% and the NASDAQ .18% as a surge post earnings in Cisco Systems (CSCO) helped the latter.
Stocks continue to digest the large gains of January as most days the market is either up or sideways. Monday was the first down day after an eight day winning streak for the S&P 500, but barely at 0.18%. The NASDAQ was actually up 0.15% as Apple showed some life, helping to drag that specific index up. Big events this week are employment reports, first pass of U.S. Q4 GDP, a Federal Reserve meeting, and U.S. ISM Manufacturing so traders mostly sat on their hands today.
Stocks rotated from positive to negative most of the day but took a turn for the worse Tuesday after comments from Senator Reid regarding the fiscal cliff ("little progress") hit the wires. The S&P 500 fell from 1407 to 1400 within minutes, and never recovered. The S&P 500 finished down 0.5% and the NASDAQ 0.3%. Decent news on home prices, consumer confidence, and durable goods were absorbed but overwhelmed by the action in D.C.