NEW YORK - For the stock market, this week hasn't been the most wonderful time of the year.
U.S. stocks fell Wednesday for the third trading day in a row. Disappointing holiday sales weighed heavily on retailers, and the unwelcome fiscal cliff package of higher taxes and lower government spending drew nearer.
The Dow Jones industrial average slipped 24.49 points to 13,114.59. The Standard & Poor's 500 index fell 6.83 to 1,419.83 and the Nasdaq composite lost 22.44 to 2,990.16.
Karyn Cavanaugh, market strategist with ING Investment Management in New York, wrote a note to clients Wednesday highlighting the less-than-merry retail sales.
"I hope that they're reading this from the mall," she said later, "because retail sales could use a boost."
The MasterCard Advisors SpendingPulse report found that sales of electronics, clothing, jewelry, and home goods increased just 0.7 percent in the two months before Christmas compared with the same period last year.
That was well below the 3 percent to 4 percent that analysts had expected and the worst performance since 2008, when spending shrank during the depths of the recession.
Major U.S. retailers including Abercrombie & Fitch, Sears Holdings, Urban Outfitters, Limited Brands, Nike, and Gap were all down. Handbag maker Coach, a bellwether of the luxury market, plummeted $3.39 to $54.13. It lost nearly 6 percent of its value, more than any other company in the S&P 500.
Right behind it was online retailer Amazon.com, which helps analysts get a read on the entire retail market. It lost nearly 4 percent, falling $9.99 to $248.63.
Plodding retail sales are a concern because consumer spending accounts for roughly 70 percent of the U.S. economy. When shoppers pull back on spending, that can take a chunk out of company earnings, which in turn pushes down the stock market.
The retail numbers are also a sign that despite scattered hints of an improving economy, including a report Wednesday about rising home prices, many consumers remain uneasy about their prospects.
"Consumers just aren't confident," said Jeff Sica, president and chief investment officer of SICA Wealth Management in Morristown, N.J. "They don't feel a sense of security that they're going to be able to maintain their job or their income or their savings."
Sica pointed out that normally the market rises at this time of year - the so-called Santa Claus rally. Since 1969, stocks have risen an average of 1.6 percent over the last five days of December and the first two of January, according to the Stock Trader's Almanac.
This year, it seems, the retail sales and fiscal cliff have been too much of an overhang.
The fiscal cliff refers to lower government spending and higher taxes that will kick in Jan. 1, if Republicans and Democrats can't agree to a new budget by then.
The Senate is due in session Thursday, and President Obama is expected to return early from his Christmas vacation, arriving back in Washington early Thursday.