NEW YORK (AFP) - United States (US) stocks closed lower on Thursday amid profit taking after shares rose strongly for two straight sessions driven by Congress's long-awaited deal to avert the economy-crunching fiscal cliff.
Also weighing in later trade were indications from the Federal Reserve that some of its core policy-makers favor wrapping up its bond-buying stimulus programs this year.
The Dow Jones Industrial Index fell 21.19 points (0.16 per cent) to 13,391.36.
The broad-based S&P 500 slipped 3.05 (0.21 per cent) to 1,459.37, while the Nasdaq Composite lost 11.69 points, or 0.38 per cent, at 3,100.57.
Stocks rose strongly on Monday and Wednesday as Congress reached a last-minute deal to avert or postpone the tax hikes and spending cuts of the fiscal cliff. But on Thursday politicians quickly launched into their next battle over the debt and deficit, promising at least one more round of policy brinksmanship in the coming weeks.
Meanwhile the minutes from the Federal Reserve's December meeting suggested a growing bias toward some policy tightening this year: they noted that some mebers of the Fed's policy board favored ending their open-ended asset purchase programs during 2013 and others by the end of the year.
That sent the dollar and Treasury bond yields rising.
"It appears that members might be more concerned by the size of the balance sheet than initially thought (as asset purchases were generally anticipated to continue until mid-2014)," Mr Thomas Julien at Natixis wrote in a research note.
Retail stocks were in play Thursday. Family Dollar sank 13.0 per cent after missing expectations for earnings in its fiscal first-quarter report. Rival Dollar General also lost ground, falling 1.37 per cent. Fred's, another regional chain, fell 5.2 per cent on its disappointing December sales.
Other retailers, however, picked up ground: Ross Stores (+8.0 per cent), TJ Maxx owner TJX (+3.3 per cent) and Nordstrom (+3.1 per cent).
Abbott Laboratories gained 3.8 per cent a day after it finished hiving off its pharmaceutical unit AbbVie, which slipped 0.8 per cent.
Ford rose nearly 2.0 per cent after reporting its best December US auto sales in six years, while GM surged 2.4 per cent for its also-strong December sales.
Bond prices slipped. The yield on the 10-year US Treasury rose to 1.86 per cent from 1.84 per cent late on Wednesday, while the 30-year pushed to 3.07 per cent from 3.05 per cent. Bond prices and yields move inversely.