DJI- NEW YORK, Nov 15 (Reuters) - U.S. stocks were little changed on Thursday as the prospect of a drawn-out battle over impending tax and spending changes made investors wary of getting into the water, while retailer Wal-Mart tumbled after disappointing sales.
The S&P 500 is down nearly 2 percent for the week, adding to last week's selloff and eroding more of the market's gains for the year.
What had looked like a stellar 2012 for stocks has turned into merely an average year, and as 2012 draws to a close, investors are becoming more inclined to protect the gains they have.
The worry is the economy could contract again if no deal is reached in Washington to avoid the "fiscal cliff" - large, automatic budget cuts and tax hikes that begin to take effect in the new year.
Combined with the euro zone debt crisis, the uncertain outlook for corporations makes it hard to know how much a stock is worth, said Alan Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio.
"Valuation is going to be uncertain because you don't know what the growth will be," said Lancz. "That is definitely not a good scenario for someone to step up to the plate and do a lot of buying."
The euro zone relapsed into its second recession since 2009 in the third quarter as the region was hurt by its debt problems.
Wal-Mart WMT.N fell 3.6 percent to $68.72 and was the biggest drag on the Dow as frugal consumers hurt the company's quarterly sales.
Investors will be watching Friday's meeting at the White House between President Barack Obama and Republican and Democratic leaders of Congress over deficit reduction for any sign the two sides are moving closer.
The memory of last year's political impasse over raising the debt ceiling has also made analysts nervous.
"(There is) uncertainty of whether we're going to have a functioning government going forward. That is a weight that sits on markets right now," said Troy Logan, managing director and senior economist at Warren Financial Service in Exton, Pennsylvania.
Even if the economy avoids an outright recession, there are fears a lengthy political dispute could sap business investment and consumer spending.
The Dow Jones industrial average .DJI slipped 28.49 points, or 0.23 percent, to 12,542.46. The Standard & Poor's 500 Index .SPX lost 2.16 points, or 0.16 percent, to 1,353.33. The Nasdaq Composite Index .IXIC was off 9.87 points, or 0.35 percent, to 2,836.94.
The S&P 500 sunk to a 3 1/2-month closing low and was well below its 200-day moving average, which it pierced last week.
Data on Thursday showed new claims for unemployment benefits surged last week, while factory activity in the mid-Atlantic region unexpectedly shrank in November as the economy felt the effects of superstorm Sandy.
A flare-up in violence in the Middle East added to market unease as Israeli warplanes bombed targets in and around Gaza city for a second day, while two rockets fired from the Gaza Strip targeted Tel Aviv.
Apple Inc shares AAPL.O dragged the Nasdaq lower, falling 2.1 percent to $525.62 and down about 25 percent since September's high.
Also in the tech sector, shares of Dell Inc DELL.O fell in after-hours trading after it reported revenue that was shy of Wall Street's expectations. Dell was down 2.2 percent at $9.35.
Volume was roughly 7.26 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE MKT, topping the year-to-date average daily closing volume of around 6.5 billion.
Decliners outnumbered advancers on the NYSE by 2,069 to 975 on the New York Stock Exchange. Decliners also had the upper hand on the Nasdaq, outpacing advancers 1,506 to 948.
NYMEX- NEW YORK, Nov 15 (Reuters) - U.S. crude futures fell Thursday as weak data stoked worries about demand in a sputtering economy and countered any bullish effect from concerns about escalating violence in the Middle East.
U.S. crude oil inventories rose last week, the Energy Information Administration (EIA) said in its weekly report released on Thursday.
CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade fell, halting a two-day rally on long liquidation tied to worries about the U.S. "fiscal cliff," and satisfactory crop weather in South America,
traders said.
* Grain markets and Wall Street sagged as investors fretted that the economy could slip into recession if no deal is reached to avoid the "fiscal cliff" - some $600 billion in spending cuts and tax hikes due to begin taking effect in January. .N
• Also, the euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data showed.
• CBOT soymeal and soyoil followed soybeans lower but soyoil was underpinned by fresh U.S. export sales.
• USDA confirmed sales of 32,000 tonnes of U.S. soyoil to unknown destinations for 2012/13 delivery. It was the second sale of soyoil to unknown destinations in two days, after USDA announced sales of 40,000 tonnes on Wednesday.
• Trade expects USDA's holiday-delayed export sales report on Friday to show weekly sales of U.S. soybeans at 250,000 to 550,000 tonnes, soymeal sales at 150,000 to 250,000 tonnes and soyoil sales at 20,000 to 50,000 tonnes.
• Drier weather in Argentina has helped boost crop seedings but another round of rain is expected next week, Commodity Weather Group meteorologist Joel Widenor said.
• In Brazil, frequent rains in the north will aid crop growth, Widenor said. There will be at least three shower chances from early next week through the end of the 15-day period in central and southern areas as well, he said.
• Argentine soy plantings should reach 19.4 million hectares this season, up from 18.7 million a year ago, the Agriculture Ministry said in a weekly crop report.
FCPO- SINGAPORE, Nov 14 (Reuters) - Malaysian palm oil futures posted on Wednesday the highest daily gain since October 2010, lifted by a slowdown in inventory build-up in the world's second largest producer and a demand recovery for the edible oil.
Malaysia's October palm oil stocks inched up 1.1 percent to a record 2.51 million tonnes, but the rise fell short of market expectations of a 7.5 percent rise in stocks to 2.67 million tonnes.
Cargo surveyor data pointed to a demand recovery as palm oil's steep $300 discount to soybean oil has encouraged some buyers to shift to the cheaper edible oil and Nov. 1-10 exports rose as much as 22 percent from a month ago.
"We expect the lower crude palm oil price and the substantial discount to soybean oil price would stimulate export demand in the months ahead," James Ratnam, an analyst with Malaysia's TA Securities, said in a research note.
"But historically, it would take 3 to 6 months for low prices to incentivise stocks drawdown, and hence, we expect any inventory normalisation and therefore firmer prices will only materialise in the first quarter next year at the earliest."
At the close, the benchmark January contract FCPOc3 on the Bursa Malaysia Derivatives Exchange posted a 4.4 percent gain at 2,425 ringgit ($792) per tonne. Prices fell to a 3-year low at 2,220 ringgit on Monday, but rebounded strongly after the release of the October stocks data.
Total traded volumes surged to 33,855 lots of 25 tonnes each after a quiet morning session ahead of the Islamic New Year holiday in Malaysia on Thursday.
Palm oil is expected to keep rebounding to 2,447 ringgit per tonne, said Reuters market analyst Wang Tao based on a wave cycle analysis.
In a bullish sign for palm oil, Brent crude rose on Wednesday after earlier declines on lower demand outlook for the fourth quarter and amid a rebound in oil exports from sanctions-hit Iran.
In other vegetable oil markets, U.S. soyoil for December delivery BOZ2 edged up 1.7 percent in late Asian trade. The most active May 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange closed 0.5 percent higher.
REGIONAL EQUITY- Nov 15 (Reuters) - All Southeast Asian stock markets fell on Thursday with Singapore hitting a four-month low, as investors sold off the region's risky assets on concerns about the possibility of drawn-out negotiations to resolve the U.S. 'fiscal cliff'.
Thailand .SETI, the region's best performing market, fell 0.4 percent to hit a seven-week low, while Singapore .FTSTI closed 1.1 percent weaker to its lowest close since July 9. The Philippines .PSI and Vietnam .VNI lost 0.7 percent and 0.2 percent respectively.
"Investors are worried about the U.S. fiscal cliff and debt crisis in Greece," said Teerada Charnyingyong, strategist at Bangkok-based broker Phillip Securities.
Investors fear that the package of U.S. tax increases and spending cuts mandated to come into force next year if a deal is not agreed - the so-called "fiscal cliff" - will pitch the world's biggest economy back into recession, dealing a fresh blow to the fragile global economy.
Stock markets in Indonesia .JKSE and Malaysia .KLSE were closed.
