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A number of mixed earnings reports from U.S. retailers and investor apprehensions ahead of Friday’s fiscal cliff negotiations at the White House left the benchmarks languishing in the red. Meanwhile, initial claims surged over the previous week and jumped to their highest level in 18 months. The Euro zone slipped back into recession for the second time since 2009. Meanwhile, the utilities and technology sectors were the major losers among the S&P 500 industry groups.

The Dow Jones Industrial Average (:DJI) dropped 0.2% to close the day at 12,542.46. The Standard & Poor 500 (S&P 500) shed 0.2% to finish yesterday’s trading session at 1,353.33. The tech-laden Nasdaq Composite Index lost 0.4% to end at 2,836.94. The fear-gauge CBOE Volatility Index (:VIX) surged 0.4% to settle at 17.99. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 7.26 billion shares, significantly higher than the year-on-year daily average of 6.5 billion shares. Declining stocks easily outpaced advancers on the NYSE; as for 66% stocks that fell, only 32% stocks moved higher.

Benchmarks ended in the red for the third consecutive day as investors continued to worry about whether the fiscal cliff would be resolved in time. Benchmarks have fallen steadily after President Barack Obama’s re-election. The S&P 500 has tumbled 5.3% since November 6, the S&P 500’s worst seven day decline in a year.

Coming to the details of corporate earnings, a number of U.S retailers released mixed earnings reports and outlooks. Wal-Mart Stores, Inc. (NYSE:WMT) tumbled 3.6% after the company posted its quarterly numbers. Revenues fell short of the Street’s estimates and the company forecasted a dismal outlook for fourth-quarter profits. Ross Stores, Inc. (NASDAQ:ROST) also fell 1.3% after the company forecasted fourth-quarter earnings which disappointed analysts. On the other hand, Target Corporation (NYSE:TGT) surged 1.7% after profits topped analysts’ estimates and the company presented a strong outlook for the next quarter.

Investors now expectantly await Friday’s meeting between top Republican and Democratic leaders, who will be discussing ways and means to avoid the impending fiscal cliff. If U.S. law makers fail to resolve the fiscal cliff of $600 billion in tax increases and government spending then its impact will be felt from the beginning of the next year. President Barack Obama emphasized the need to increase tax rates for wealthy American saying:"What I have told leaders privately as well as publicly is that we cannot afford to extend the Bush tax cuts for the wealthy.”

According to the U.S. Department of labor, the advance figure for seasonally adjusted initial claims increased by 78,000 to 439,000 for the week ending November 10 from the prior week’s revised figure of 361,000. This was way above consensus estimates of 385,000. According to the labor department a surge in initial claims was largely due to the destruction caused by Hurricane Sandy. Meanwhile, Federal Reserve Bank’s business activity index for the Philadelphia region contracted in November. According to the report, the index fell more than 16 points from the previous month to -10.7, below consensus estimates of 0.25.

Meanwhile, Federal Reserve minutes hinted that the central bank would possibly announce a new bond buying agenda in December to increase employment. Under the ongoing program called “Operation Twist”, the Fed has been buying $45 billion in longer term bonds while selling the same amount in short term debt in another bid to decrease the rates. Operation Twist will expire at the end of the year.

On the international front, the Euro zone fell back into recession in the third-quarter for the second time since 2009. Euro zone GDP fell 0.1% in the third-quarter from the previous quarter. The region was largely hit by its debt crisis. The Euro zone was also affected by a decline in U.S. demand, which is the region’s largest export partner. Unemployment rates in Spain and Greece have surged over 25%.

Technology sector bellwether Apple Inc. (NASDAQ:AAPL) lost 2.1% and dragged the technology sector lower. Company shares have fallen 25% since touching their highest level in September. The Technology SPDR (XLK) fell 0.7% and was the major loser among the S&P 500 industry groups. Stocks such as Hewlett-Packard Company (NYSE:HPQ), Microsoft Corporation (NASDAQ:MSFT), Dell Inc. (NASDAQ:DELL) and SanDisk Corporation (NASDAQ:SNDK) dropped 0.4%, 0.7%, 0.2% and 1.4%, respectively.