Today: Wall Street falls for the third straight day as early returns from holiday shopping are the worst since 2008. Also: Apple (AAPL), Amazon and eBay (EBAY) face stock declines as well, Marvell patent trial ends with large judgment.
Stocks decline as holiday shopping disappoints retailers, investors
Stocks slipped for the third consecutive session Wednesday, as investors showed concern about weak holiday shopping, with retail stocks diving after a Christmas Day report showed the worst growth in November and December sales since the U.S. economy tanked in 2008.
The three major U.S. stock indexes declined by as much as 0.7 percent after MasterCard Advisors SpendingPulse reported Tuesday that sales of electronics, clothing, jewelry and home goods in the two months before Christmas increased less than 1 percent from 2012, far below the growth of 3 percent to 4 percent for which retailers had hoped.
"It's a lost season," the firm's vice president of research and analysis, Michael McNamara, told The Wall Street Journal. "Sales and volume are about the same as last year, but the growth was marginal."
The year-over-year growth of 0.7 percent is the worst MasterCard Advisors SpendingPulse has tracked since 2008, when the recession caused consumers to sharply rein in their spending.
Retailers took the brunt of Wednesday's declines, including Bay Area-based chains Gap (down 3.1 percent) and Ross Dress for Less (down 2.6 percent).
"With the 'fiscal cliff' hanging over our heads, it was hard to convince people to shop, and now it's hard to convince investors that there's any reason to buy going into year-end," Rick Fier, director of trading at Conifer Securities, told Reuters.
Retailers' last hope to salvage the season lies in post-Christmas shopping, which kicked off Wednesday. McNamara told the Associated Press that stores bring in as much as 15 percent of December revenue in the final week, as shoppers use gift cards and take advantage of after-Christmas sales.
Mercury News reporters in the field reported slow early activity at the region's malls and shops Wednesday, but it picked up throughout the day. Many shoppers had their sights set on drastically reduced merchandise, however, which would do little for retailers' bottom lines except clean out their inventories.
"I'm just looking around to see what's nice and cheap," Mary Solis said while eating a crepe early Wednesday at Westfield Valley Fair in San Jose.
However, many found that the deals retailers were offering Wednesday were not different from what could be found just before Christmas, when retailers began drastically reducing merchandise.
"Sixty percent off -- you see that before Christmas," Solis's friend Beth Manlapaz said, adding "It's not that much different from previous sales."
Apple and other consumer-oriented tech stocks fall
Technology companies that depend on sales to consumers had a rough day on Wall Street as well, with the tech-heavy Nasdaq dropping the most of the three major U.S. indexes and the SV150 index of Silicon Valley's largest industry players declining 0.6 percent.
Apple's fourth-quarter swoon continued, as the Cupertino tech giant fell 1.4 percent and neared its lowest closing point since its major decline began in late September. While Apple's stock price is still resoundingly positive for the full year, it has fallen 27.2 percent to $513 since hitting an all-time high of $705.07 on the day of the iPhone 5's debut, as analysts guess at the reasons and grow more bearish about the company's prospects.
Amazon and eBay, which rose early in the holiday shopping season as initial reports showed strength in their online sales, took a dive on Wednesday as well. Amazon declined 3.9 percent and San Jose-based eBay fell 1.6 percent.
In one of the few success stories of the day, Netflix (NFLX) was able to gain 0.5 percent despite a widely publicized outage of its popular streaming service on Christmas Eve. The Los Gatos video-on-demand company reported Tuesday that the failure was on the part of Amazon, possibly hurting its competitor's performance on the day, while Netflix seems headed for social features it greatly desires.
Marvell faces large patent-infringement penalty, stock drops
Marvell stock plummeted Wednesday after the chipmaker lost a patent-infringement lawsuit that could ultimately cost it $3.5 billion.
A jury in Pennsylvania found that Marvell, which has its headquarters in Santa Clara but is legally based in Bermuda, used hard-drive technology patented by Carnegie Mellon University in billions of its chips without proper licensing, and awarded the school $1.17 billion in damages. The jury also decided that Marvell knowingly infringed on the patents, which gives the judge the ability to triple the damages.
Marvell lost 10.3 percent Wednesday to close at $7.40.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Down 22.44, or 0.74 percent, to 2,990.16
The blue chip Dow Jones industrial average: Down 24.49, or 0.19 percent, to 13,114.59
And the widely watched Standard & Poor's 500 index: Down 6.83, or 0.48 percent, to 1,419.83
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.