Stocks fell on Friday, putting the S&P 500 on track for a fifth straight decline, as President Barack Obama and top congressional leaders were to make a last-ditch attempt to steer the United States away from driving off the "fiscal cliff."
Obama and lawmakers will meet at the White House Friday afternoon for talks before a New Year's deadline to keep large tax hikes and spending cuts from taking effect and threatening the economy with recession.
Continue Reading Below
Investors' pessimism about achieving anything more than a stop-gap deal by the deadline showed in the benchmark S&P index's 1.6 percent decline this week. The broad index was on pace for its worst weekly performance since the U.S. elections.
With time running short, members of Congress may attempt to pass a retroactive fix on tax rises and spending cuts soon after the automatic fiscal policies come into effect on January 1.
"It doesn't matter which side wins, but at this point nobody wants to play a game where there aren't rules," said Joe Costigan, director of equity research at Bryn Mawr Trust in Bryn Mawr, Pennsylvania.
"So everybody is talking about what the prospects are for changes in the rules, but at the end of the day nothing is happening."
Highlighting Wall Street's sensitivity to developments in Washington, stocks took a dive of more than 1 percent on Thursday after Senate Majority Leader Harry Reid warned a deal was unlikely before the deadline. But later the index rebounded after the House of Representatives said it hold an unusual Sunday session to work on a fiscal solution.
With many market participants away for the holiday-shortened week, volume is expected to remain light, which could exacerbate market swings.
The Dow Jones industrial average dropped 90.70 points, or 0.69 percent, to 13,005.61. The Standard & Poor's 500 Index lost 9.74 points, or 0.69 percent, to 1,408.36. The Nasdaq Composite Index fell 16.25 points, or 0.54 percent, to 2,969.66.
Market breadth was skewed to the negative, with declining stocks outnumbering gainers on the NYSE by 2,044 to 690, while on the Nasdaq, decliners outnumbered advancers 1,466 to 707.
Positive economic data failed to alter the market's downtrend.
The National Association of Realtors said contracts to buy previously owned U.S. homes rose in November to their highest level in 2-1/2 years, while a report from the Institute for Supply Management-Chicago showed business activity in the U.S. Midwest expanded in December.
Barnes & Noble Inc rose 8.2 percent to $15.55 after the company said Pearson had agreed to make a strategic investment in its Nook Media subsidiary, but the Nook business will also not meet the bookseller's prior projection for fiscal year 2013.
MagicJack Vocaltec Ltd forecast over $39 million in GAAP revenue and over 70 cents per share in operating income for the fourth quarter and appointed Gerald Vento president and CEO, effective January 1. Shares jumped 6.9 percent to $17.40.
Aeterna Zentaris Inc U.S.-listed shares surged 18.4 percent to $2.57 after the company said it had reached an agreement with the U.S. Food and Drug Administration on a special protocol assessment by the FDA for phase 3 registration trial in endometrial cancer with AEZS-108 treatment.
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)