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Wall Street sustained heavy selling Friday, denting annual gains, as the growing specter of the U.S. tumbling over the fiscal cliff sent traders rushing out of equities.
The Dow Jones Industrial Average fell 158 points, or 1.2%, to 12938, the S&P 500 dipped 15.7 points, or 1.1%, to 1402 and the Nasdaq Composite slumped 25.6 points, or 0.86%, to 2960.
All three major market averages have been down for five sessions in a row. For the week, the Dow shed 1.9%, the S&P 500 dipped 1.9% and the Nasdaq dropped 2%. The year-end losses have eaten into annual gains, with the S&P 500 now pointing to year-to-date gains of 11.5% from more than 14% before the selloff began.
The focus across world trading desks has been the fiscal cliff -- a potent punch of spending cuts and tax hikes -- that now looms just days away. Budget negotiations have been deadlocked for days, with Democrats and Republicans in Congress lobbing criticism at each other. The Senate is back in session, and the House of Representatives will come back for legislative action on Sunday evening.
The selling on Wall Street heated up late in the day on news President Barack Obama offered congressional leaders the same plan he talked about last Friday at a news conference in a last-minute meeting. The plan includes preventing tax increases on those making $250,000 or less a year and the extension of emergency unemployment benefits, the person familiar with the matter told FOX Business.
Investment banks keeping track of the talks for clients have said they see an increased chance of the U.S. rolling off the cliff in the past week. Still, there are hopes among some analysts that at least a temporary plan will be crafted to stop some of the effects that could throw the economy into a mild recession in the first quarter of 2013.
Two economics reports released on the day that beat expectations did little to sway the Street.
Signed contracts to buy existing homes climbed 1.7% in November from October to the highest level since April 2010, according to the National Association of Realtors. Economists forecast a smaller gain of 1%. The forward-looking housing indicator was up 9.8% from the same month in 2011.
The Institute for Supply Management-Chicago’s PMI gauge climbed to 51.6 in December from 50.4 the month before, a slightly better reading than the 51 economists forecast. Readings above 50 point to expansion in the Midwest manufacturing sector, while those below indicate contraction.
Energy futures traded to the downside. The benchmark crude oil contract fell 7 cents, or 0.08%, to $90.80 a barrel. Wholesale New York Harbor gasoline slumped 0.76% to $2.80 a gallon. In metals, gold fell $7.80, or 0.47%, to $1,656 a troy ounce.
The Euro Stoxx 50 fell 1.2% to 2627, the English FTSE 100 dipped 0.49% to 5925 and the German DAX slumped 0.57% to 7612.
In Asia, the Japanese Nikkei 225 advanced 0.7% to 10395 and the Chinese Hang Seng climbed 0.21% to 22667.
Rich Edson contributed reporting from Washington, D.C.