- Mexican train carrying 1,300 migrants headed toward U.S. derails
- Secret Service begins regular K-9 patrols around White House
- Pentagon’s human memory-chip program moves forward
- Obama blasts GOP, ignores immigration crisis in Texas speech
- Marine Warfighting Lab tests the Godzilla of amphibious assault vehicles
- Harry Reid: Birth-control ruling the worst Supreme Court decision in 25 years
- Vet suicides ‘horrible human cost’ of VA dysfunction: lawmaker
- First marijuana customer in Spokane says he was fired
- Hagel: ‘Make no mistake,’ ISIL is an ‘imminent’ threat to U.S.
- Armed militia sets up Texas command center to ‘fight for national sovereignty’
‘Fiscal cliff’ whipsaws stocks; confidence dims
Question of the Day
NEW YORK — The “fiscal cliff” took the stock market on a roller coaster Thursday. Small developments in the tense budget standoff yanked stocks back and forth throughout the day.
In the end, U.S. stocks closed lower for the fourth day in a row, sending the unwelcome message that the budget standoff is still far from solved, the economy still far from healed.
The erratic performance underscored how the “fiscal cliff” can yank the market back and forth. The term refers to automatic tax increases and government spending cuts that will kick in next week if Republicans and Democrats can’t reach a budget agreement by Monday night.
Stocks opened by hopping between small gains and losses, pulled up by news about fewer unemployment claims and down by the continuing lack of a budget deal in Washington.
Then, stocks turned decisively downward at mid-morning, unnerved by twin fetters: a report that consumer confidence fell to its lowest level since August, and a warning from the Senate Majority Leader, Democrat Harry Reid, that he feared the government would miss the Monday night deadline for working out a budget compromise.
A bright spot of economic news, an increase in sales of new homes, couldn’t distract investors from worries about the budget impasse. Both Republicans and Democrats demanded that the other side take the initiative in compromising. The Dow Jones industrial average fell as much as 150 points, more than 1 percent.
Then, just as the Dow appeared headed toward a triple-digit loss, it whipsawed again, this time higher, after House leaders announced in the late afternoon that the chamber would meet Sunday evening to work on the budget.
At the close, stocks trimmed their losses but still closed lower. The Dow finished down 18.28 points to 13,096.31. The Standard & Poor’s 500 index fell 1.73 to 1,418.10. The Nasdaq composite index lost 4.25 to 2,985.91.
Until recently, investors were treating the “fiscal cliff” with a measure of nonchalance. Stocks rose more or less steadily from mid-November until late last week.
But now, with the “fiscal cliff” deadline just days away and no deal in sight, more investors are paying attention.
“This is a matter of a few personalities; it isn’t something where you can analyze spreadsheets to figure out what’s going on,” said David Kelly, chief global strategist at JPMorgan Funds. “There are very few investors on one side or the other who have wanted to make a strong bet on this one.”
Many investors believe that the higher taxes and lower government spending could push the U.S. back into recession.
“This is not small potatoes,” said Hugh Johnson, chairman and chief investment officer of Hugh Johnson Advisors in Albany, N.Y. “We’re not going to miss a recession by much in 2013 as is.”
To be sure, plenty of traders think the “fiscal cliff” is overhyped. Even if the government misses the Monday deadline, the higher taxes and lower government spending would take effect only gradually, and Congress could always repeal them.
Still, that doesn’t mean they’re not worried about the economy in general.
TWT Video Picks
Senate majority leader practices politics of personal destruction
- Armed militia sets up Texas command center to 'fight for national sovereignty'
- HUSAIN: The fake caliph of 'The Islamic State'
- IRS employee suspended for pro-Obama activities
- GOP aims to sue Obama first over health care employer mandate
- Amid border crisis, Obama to take 15-day vacation in Martha's Vineyard
- Facebook allows 'Kill Kendall Jones' page, but deletes her game hunting photos
- MARTIN: Iraq without Nouri al-Maliki
- Trial: dengue shot offers some protection
- GOP: Lerner warned IRS employees to hide information from Congress
- Sgt. Andrew Tahmooressi denied freedom by Mexican judge
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world
Fighting in Iraq
World Cup's sexiest WAGs
U.S.-Ghana World Cup opener