Stocks slip ahead of holidays

Major gauges decline in light trading; durable goods orders fall unexpectedly; bond prices tumble.

By Grace Wong, staff writer

NEW YORK ( -- Stocks slid Friday amid concerns about the health of the economy, although trading was light ahead of the holiday weekend.

The Dow Jones industrial average (down 66.42 to 12,354.83, Charts) lost about 0.5 percent two hours into the session. The broader S&P 500 index (down 5.57 to 1,412.73, Charts) and the tech-heavy Nasdaq composite (down 9.93 to 2,405.92, Charts) posted modest losses.

The so-called Santa Claus rally that has boosted stocks this month has been slipping amid concerns about the slowing economy.

Adding to those worries Friday was a report showing durable goods orders tumbled unexpectedly in November.

The Commerce Department said orders for big-ticket items, excluding transportation, fell 1.1 percent.

Stocks also had trouble finding momentum in pre-holiday trading. U.S. stock markets will close Monday for Christmas.

"When you have a limited audience like you do today and you'll have next week, there are more dramatic moves up and down," Alfred Goldman, chief market strategist at A.G. Edwards, said.

Also on the economic front, the University of Michigan issued a final reading for its consumer sentiment index that showed confidence remained high in December. The reading is considered an indicator of consumer spending, which fuels about two-thirds of the nation's economic activity.

The Commerce Department released a report on personal income and spending that offered a tame reading on inflation. The report's key inflation gauge, called the core PCE, was flat in November. (Full story)

On the move

Volatility was high ahead of the holidays. The CBOE Volatility index (up $0.55 to $11.08, Charts) climbed 5 percent.

On the 30-share Dow, 27 stocks declined and 3 advanced.

Elsewhere, software company Red Hat (up $3.02 to $20.98, Charts) surged 17 percent. The company reported upbeat earnings for its latest quarter late Thursday and issued a robust forecast for the current period.

Qualcomm (down $0.66 to $37.88, Charts), a provider of microchips for mobile telephones, fell almost 2 percent. The company lowered its quarterly profit outlook Thursday.

Rupert Murdoch's News Corp. (Charts) agreed to exchange its controlling stake in DirecTV Group (Charts), along with other assets and cash, for Liberty Media's $11 billion stake in News Corp. Liberty (up $3.20 to $96.84, Charts) shares jumped 3 percent.

Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by a margin of 3 to 2 on volume of 392 million shares. On the Nasdaq, losers beat winners by a margin of 4 to 3 as 598 million shares changed hands.

U.S. light crude oil for February delivery fell 6 cents to $62.60 a barrel on the New York Mercantile Exchange, extending Thursday's more than $1 decline.

Treasury prices fell, raising the yield on the benchmark 10-year note to 4.62 percent from 4.54 percent late Thursday. Bond prices and yields move in opposite directions.

The dollar was lower against the euro and little changed against the yen.

COMEX gold held steady at $621.60 an ounce.

Stocks in Asia closed mostly higher, while major indexes in Europe were lower in afternoon trading.

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