Stocks tumble as fiscal cliff looms
By STEVE ROTHWELL AP Business Writer December 24, 2012 3:20PM
FILE - In this New York Stock Exchange Friday, Dec. 21, 2012, photo, Trader Warren Meyers uses his handheld device as he works on the floor of the New York Stock Exchange. Stocks are down Monday, Dec. 24, 2012, amid concern that lawmakers will fail to reach a deal to stop the U.S. going over the so-called fiscal cliff. (AP Photo/Richard Drew)
Updated: December 24, 2012 3:20PM
Stocks fell in light trading Monday during a shortened holiday trading session with lawmakers running out of time to reach a deal that would prevent the U.S. from going over the so-called fiscal cliff.
The Dow Jones industrial average fell 32 points at 13,158. The Standard & Poor’s 500 index gave up 3.3 points to 1,426.9. The Nasdaq composite slipped 8 points to 3,013.
Sen. Joe Lieberman said Sunday that it “It’s the first time that I feel it’s more likely we’ll go over the cliff than not,” following the collapse late Thursday of House Speaker John Boehner’s plan to allow tax rates to rise on million-dollar-plus incomes. Wyoming Sen. Jon Barrasso, a member of the Republican leadership, predicted the new year would come without an agreement.
Stocks fell sharply Friday, with the Dow logging its biggest drop in more than a month, after House Republicans called off a vote on tax rates, leaving federal budget talks in disarray just days before sweeping tax increases and government spending cuts are scheduled to take effect. Failure to agree on a budget plan could lead to simultaneous spending cuts and tax hikes that many fear may push the economy back into recession.
President Barack Obama and Congress are on a short holiday break. Congress is expected to be back at work Thursday and Obama will be back in the White House after a few days in Hawaii.
Still, barring a dramatic sell-off in the year’s final days of trading, stocks will end the year higher. The S&P 500 is currently 13 percent higher for the year, the Dow is almost 8 percent up and the Nasdaq is 16 percent higher.
The stock market will close at 1 p.m. Monday and be shut Tuesday for the Christmas holiday.
The yield on the 10-year Treasury note rose 1 basis point to 1.78 percent.