Richard Drew, Associated Press
NEW YORK — After eight weeks of gains, maybe the stock market pullback long anticipated by investors has arrived.
Stocks fell Tuesday, dragged lower by the Detroit automakers and consumer-focused companies such as GameStop and Amazon.com. The market could be headed for its first weekly decline since early October, putting at risk a remarkable rally that has sent indexes to record highs.
The declines do not come as a surprise to large investors, many of whom have been predicting a pullback. The S&P 500 has surged 26 percent this year, on track for its best year since the dot-com bull market of the late 1990s.
Stocks cannot go straight up all the time. For stocks to pause, decline or even enter a "correction," a Wall Street term for when an index falls 10 percent or more, would all be considered normal after eight straight weeks of gains.
"The markets may have stalled out here, but that must be taken in the context of what has been a great year," said Alec Young, global equity strategist with S&P Capital IQ.
The Dow Jones industrial average lost 94.15 points, or 0.6 percent, to 15,914.62. The Standard & Poor's 500 index fell 5.75 points, or 0.3 percent, to 1,795.15 and the Nasdaq composite fell 8.06 points, or 0.2 percent, to 4,037.20.
Companies that depend heavily on consumer spending had some of the biggest losses. GameStop, the video game retailer, sank $1.02, or 2 percent, to $45.95, one of the worst declines in the S&P 500 index. Amazon.com fell $7.64, or 2 percent, to $384.66.
Automakers fell. General Motors lost 97 cents, or 3 percent, to $38.14 and Ford fell 50 cents, or 3 percent, to $16.56, despite what auto industry analysts considered mostly positive sales reports for November.
The sell-off auto stocks cams as a surprise to industry analysts. Chrysler said sales rose 16 percent in November compared with a year ago, while GM and Ford's sales increased 14 percent and 7 percent, respectively. Overall, the industry reported a 9 percent year-over-year sales gain.
Investors are waiting for several economic reports later this week that could influence whether the Fed will pare back its $85 billion-a-month bond-buying program, which is designed to keep interest rates low and stimulate the economy.
"When you look at how markets have performed this year, some investors may have decided to cash in, put their feet up and drink eggnog," said Lawrence Creatura, a portfolio manager with Federated Investors.
On Friday, the government will release its monthly job market survey, one of the most closely watched indicators of the U.S. economy. Economists expect that employers created 180,000 jobs last month while the unemployment rate remained steady at 7.2 percent, according to FactSet, a financial information provider.
Investors have been seeing some encouraging economic news recently. A trade group reported Monday that manufacturing was growing in the U.S. at the fastest pace in two and a half years. The group also said factories were hiring at the quickest rate in 18 months.
A strong economy is good for corporate profits, and by extension the stock market, over the long term. But if the economy is getting closer to full strength, that means the Federal Reserve could have all the more reason to pull back its stimulus program, which has been supporting financial markets. The Fed's huge bond-buying program has been giving investors an incentive to buy stocks by making bonds look more expensive in comparison.
"The concern in the near term is that, since the economic data is picking up steam, the Fed could pull back as soon as January," Young said.
On Thursday investors will have other important economic news to consider, an updated report on U.S. economic growth. Economists expect the economy expanded at a 3.2 percent annual rate last quarter.
A key worry for investors these days is how willing U.S. consumers are to spend during the holiday shopping season, which is just getting underway.
The National Retail Federation said Monday that a record number of consumers went shopping over the four-day Thanksgiving weekend. However, the average amount spent by each shopper fell compared with the same period last year, the first decline since the trade group began tracking the figures in 2006.
In company news:
Yum Brands fell $2.10, or 3 percent, to $75.61. The owner of KFC and Taco Bell said sales in China, a key market for the company, have been sluggish because of concerns among Chinese customers about food safety.
Abercrombie & Fitch rose $1.97, or 6 percent, to $35.99. The stock of the teen clothing store owner rose after an activist shareholder, Engaged Capital, sent a letter to the company demanding that CEO Michael Jeffries be replaced.
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