Wall St slips on cliff caution, but homebuilders gloss

NEW YORK (Reuters)-u.s. stocks fell on Tuesday as the wrangling continued in Washington over budget talks, while homebuilders stocks outperformed the broader market after positive data.

Strengthening the case for a sustainable rebound in housing construction, single-family home prices rose for an eighth straight month in September. The Semiconductor Sector index housing.HGX advanced 0.5 percent, with all but one of the 19 items gains books.

"As long as you have an interest rate as low as they are now, housing is definitely back," said Brian Amidei, managing director at HighTower Advisors in Palm Desert, California.

Despite strong housing data, an increase of more than the scheduled business expenditure and a 4-year high in consumer sentiment traders were cautious as politicians in Washington made little progress in the treatment of the "fiscal cliff."

Markets have lately focused on whether Congress and the White House can agree on ways to prevent some $ 600 billion in cuts and tax increases the automatic due to kick in early next year.

"If there is any reason why the (stock) market is jammed, it is because large investors have decided to take a step back and see this game, because I think she's very aware of how important this is," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.

The Dow Jones industrial average.DJI fell 74.53 points, or 0.57 percent, to 12, 892.84. The S P 500 Index &. SPX dropped 5.68 points, or 0.40 percent, to 1, 400.61. The Nasdaq Composite Index shed 4.80 points, or 0.16 percent, IXIC. to 2, 971.98.

The S P 500 & stopped 1,400, an important psychological level the recovered last week. Last week, got the S & P 500 nearly 4 percent.

As budget negotiations hang, Las Vegas Sands (LVS.N) and Supertex (SUPX.O) added their names to a growing list of companies announcing special dividends aimed at helping investors to avoid a possibly higher tax burden next year.

Las Vegas Sands jumped 5.5 percent to $ 46.46. Supertex rose by 3.4 percent to $ 17.41.

Food maker Ralcorp Holdings (RAH.N) shares rose 26.5% to $ 88.82 after long time freer unknown foods (CAG.N) sealed a deal to buy for $ 5 billion. Unknown acquired shares 4.3 percent to $ 29.50.

Corning Inc. (GLW.N) shares rose 6.7 percent to $ 12.11 after the specialty glass maker said that it expects that the sale of its entire year Gorilla glass, which is used in smartphones and tablets, approach $ 1 billion.

McMoRan exploration co. (MMR.N) shares tumbled 11.8 percent to $ 8.51 per day after the oil and gas industry driller gave a disappointing update on a prospect important gas in a Gulf of Mexico.

(Reporting by Rodrigo Campos; Editibg of Jan Paschal)

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Caution Warranted as E15 Launches in Kansas

From Kansas we hear that a gas station owner in Lawrence has become the first in the country to offer E15 fuel – gasoline with 15 percent ethanol instead of the 10 percent blend that’s standard around the U.S. According to the New York Times, Scott Zaremba may expand E15 to more of his eight stations.

Before motorists in the Lawrence area rush down to fill up, they might take the time to check their vehicle warranties. Even though the EPA has approved E15 for cars and light trucks from model year 2001 forward, a Coordinating Research Council study showed that the fuel can cause engine damage. Automobile manufacturers have said vehicle warranties will not cover damage from E15. Bob Greco, API downstream group director:

“We need to press the pause button on EPA’s rush to allow higher amounts of ethanol in our gasoline. The new fuel could lead to engine damage in more than 5 million vehicles on the road today and could void the manufacturer’s warranty.”

Greco said E15 also could damage engines in boats, recreational vehicles and lawn equipment. Consumers should follow the fueling recommendations in their owner’s manuals and carefully read all gasoline pump labels before refueling, he said.

Potential problems with E15 – which is being advanced as a way to help meet volume requirements set out by the Renewable Fuels Standard – were discussed at a hearing on Capitol Hill this week. API President and CEO Jack Gerard criticized EPA’s rush to push E15 into the marketplace:

“EPA should not have proceeded with E15, especially before a thorough evaluation was conducted to assess the full range of short- and long-term impacts of increasing the amount of ethanol in gasoline on the environment, on engine and vehicle performance, and on consumer safety.”

Greco said consumer protection is paramount:

“Our first priority should be protecting consumers and the investments they’ve made in their automobiles. EPA has an obligation to base this decision on science and not on a political agenda.”

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