Stocks dip with budget deal in doubt at year’s end

Published 10:06 am Monday, December 24, 2012

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.