U.S. stocks fell as Dow Chemical Co., the largest chemical maker in the U.S., and Rohm & Haas Co. plunged after financing for their merger fell through, raising concern companies may be unable to complete deals as funding disappears.

The Standard & Poor’s 500 Index lost 1.2 percent to 862.49 at 10:44 a.m. in New York. The Dow Jones Industrial Average fell 84.11 points, or 1 percent, to 8,431.44. The Russell 2000 Index of small companies retreated 2.2 percent to 466.22. The MSCI World Index of 23 developed markets rose 0.4 percent to 896.53.

U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years. It is predicted that retailers will close 12,000 stores in 2009.

More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc., Sharper Image Corp. and Steve & Barry’s LLC, have sought bankruptcy protection this year as the credit squeeze and recession drained sales. Investors will start seeing a wide variety of chains seeking bankruptcy protection in February when they file financial reports.

Discounts of 70 percent off or more by Macy’s, AnnTaylor Stores Inc. and other retailers failed to prevent a spending drop of as much as 4 percent during the final two months of the year, according to data from SpendingPulse. Consumers are just trained for sales it seems. “The situation is not going to right itself in January; it’s going to be a long while that discounting’s going to be around,” one analyst said. “Consumers are going to get used to it and it’s going to very difficult for retailers to move forward in a full-price mode.”