Stocks fell on Tuesday (January 8), retreating from last week's rally on the "fiscal cliff" deal in Washington, as companies started to report results for the fourth quarter.
After a 4.3 percent jump in the two sessions around the close of the fiscal cliff negotiations, the S&P has declined a bit, with investors finding few catalysts to extend the rally that took the benchmark to five-year highs.
Shares of AT&T Inc dropped 1.7 percent to $34.35 (USD), making it one of the biggest drags on the S&P 500, after the company said it sold more than 10 million smartphones in the quarter.
This figure beat the same quarter in 2011, but also means increased costs for the wireless service provider. Providers like AT&T pay hefty subsidies to handset makers so that they can offer discounts to customers who commit to two-year contracts.
Fourth quarter profits are expected to beat the previous quarter's lackluster results, but analyst estimates are down sharply from October. Quarterly earnings are expected to grow by 2.7 percent, according to Thomson Reuters data. Dow component Alcoa, the largest U.S. aluminum producer, reported results after the closing bell, along with education provider Apollo Group.
The Dow Jones industrial average dropped 55.44 points, or 0.41 percent, to 13,328.85. The Standard & Poor's 500 Index fell 4.74 points, or 0.32 percent, to 1,457.15. The Nasdaq Composite Index lost 7.01 points, or 0.23 percent, to 3,091.81.
