Stocks slide as impasse over deficit bogs down

NEW YORK — Investors drew little hope Wednesday for a quick compromise in U.S. budget talks after President Barack Obama insisted that higher taxes on wealthy Americans would have to be part of any deal.

Stocks fell sharply, and even a signal from the Federal Reserve that it could launch a program in December to speed job growth failed to encourage investors.

Stocks have fallen steadily since voters returned Obama and a divided Congress to power on Nov. 6.

On Wednesday the Dow dropped 185.23, or 1.5 percent, to 12,570.95. The S&P fell 19.04, or 1.4 percent, to 1,355.49, and the Nasdaq composite declined 37.08, or 1.29 percent, to 2,846.81.

Indexes still are up on the year, though they have pared gains since reaching four-year highs.

Coffee? Tea? Starbucks to bag Teavana in deal

SEATTLE — Starbucks is ramping up its tea business with a $620 million purchase of Atlanta-based tea seller Teavana.

The coffee giant said Wednesday that it sees a growing market for tea. Starbucks already owns the Tazo tea brand.

Starbucks plans to expand Teavana’s network of 300 mall-based stores and add other kinds of stores as well.

Toyota recalls vehicles for steering, pump defects

TOKYO — Toyota is recalling 2.77 million vehicles around the world for a water pump problem and a steering shaft defect that may result in faulty steering, the latest in a spate of quality woes for Japan’s top automaker.

No accidents have been reported related to these two problems announced Wednesday, according to Toyota.

Some 1.51 million vehicles are being recalled for the steering defect in Japan and 1.25 million vehicles abroad, including 670,000 in the U.S. Affected models include the Prius hybrid, Corolla, Wish and other models produced from 2000 to 2011 in Japan, and from 2000 to 2009 overseas.

Sandy, edgy shoppers lower U.S. retail sales

WASHINGTON — Superstorm Sandy combined with cautious consumers to lower retail sales in October and raise concerns about weaker economic growth and a tepid holiday shopping season.

Consumers also might be holding back because of anxiety over big tax increases and spending cuts that could take effect in January.

Retail sales dropped 0.3 percent after three months of gains, the Commerce Department said Wednesday. Sales at car dealers fell 1.5 percent, the most in more than a year.

A&F’s shares surge on strong quarterly report

NEW YORK — Abercrombie & Fitch delivered a pleasant pre-Christmas surprise to investors — the teen retailer raised its full-year earnings guidance on a strong third-quarter performance, sending shares surging over 34 percent.

The company reported a 41 percent increase in net income for the third quarter as international, domestic and direct-to-consumer sales strengthened. The results beat Wall Street expectations.

The strong quarterly performance is welcome news for A&F, which has been struggling to sell its preppy jeans and T-shirts as fashion trends are shifting and a rough economy has left teens around the world on tighter budgets.

Wire reports