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The markets came back from steep losses in tumultuous trading Thursday, ending just slightly lower, as traders grappled with a veritable deluge of headlines on U.S. budget talks.
The Dow Jones Industrial Average fell 18.3 points, or 0.14%, to 13096, the S&P 500 dipped 1.7 points, or 0.12%, to 1418 and the Nasdaq Composite slumped 4.3 points, or 0.14%, to 2986.
In a sign of the breadth of the comeback, the Dow had been down 151 points at the lows of the session, falling under the 13000 mark. Still, the markets ended in the red for the fourth day in a row. Trading desks have remained fixated on the looming fiscal cliff.
Talks are set to resume after a quick Christmas break, with President Barack Obama cutting short his trip to Hawaii and the Senate coming back into session. A source also told FOX Business the House of Representatives will reconvene Sunday evening, sparking the big rebound on Wall Street. This will be the first time Congress has met for legislative action since 1970, according to an analysis by Fox News.
Still, Senate Majority Leader Harry Reid quickly doused any hopes of a quick solution on the day, suggesting the U.S. is poised to tumble over the cliff if the situation in Congress doesn't change.
"Nothing can move forward in regards to our budget crisis unless (House) Speaker Boehner and (Senate) Leader McConnell are willing to participate in coming up with a bipartisan plan," he said. "Speaker Boehner is unwilling to negotiate, and we have not heard a word from Leader McConnell. Nothing is happening."
Minutes before the closing bell Wednesday, GOP House of Representatives leadership renewed their call for action from the White House and Democrats in the Senate. After the bell, Treasury Tim Geithner issued a letter to Congress saying the U.S. is set to hit the debt limit on December 31. The Treasury will now have to take "extraordinary measures" to push that back -- likely to February, political analysts and economists say.
In a sign of the fiscal woes, the Conference Board's measure of consumer confidence slid to 65.1 in December from 71.5 the month before. Economists expected a stronger reading of 70. The group attributed part of the fall to the looming fiscal cliff.
Also on the economic front, the number of individuals filing for first-time jobless benefits fell by 12,000 to 350,000 last week, much lower than the 360,000 economists forecast. The Labor Department said claims in 19 states were estimated due to the holiday.
The Commerce Department said sales of new, single-family homes climbed 4.4% in November from October to an annual rate of 377,000 units -- the highest since April 2010. The reading was just slightly lower than the 378,000 economists forecast.
Shares of homebuilders like KB Home (NYSE:KBH) and Toll Brothers (NYSE:TOL) tend to be particularly affected by these data.
Energy markets cooled down after Wednesday's big rally. The benchmark oil contract fell 11 cents, or 0.12%, to $90.87 a barrel. Wholesale new York Harbor gasoline rose 0.2% to $2.821 a gallon. In metals, gold climbed $3.00, or 0.18%, to $1,664 a troy ounce.
The Euro Stoxx 50 rose 0.43% to 2660, the English FTSE 100 was flat at 5954 and the German DAX advanced 0.26% to 7656.
In Asia, the Japanese Nikkei 225 rallied 0.91% to 10323 and the Chinese Hang Seng edged up 0.35% to 22620.
Rich Edson contributed reporting from Washington, D.C.