Stocks Drop for the Week as Obama Struggles to Make a Deal on 'Fiscal Cliff'
NEW YORK (TheStreet) -- U.S. stocks fell for the fifth trading day in a row, as investors grew anxious about the fiscal-cliff stalemate that threatens to tip the economy into a recession if an agreement isn't found by Dec. 31.
Corporate news did little to dictate the direction of the stock market this week, which was shortened because of the Christmas holiday. It was all about the looming fiscal cliff and the inability of President Obama and House and Senate leaders to compromise on a package of tax increases and spending cuts.
Obama now has three days to broker a deal. He met today with House Speaker John Boehner and Senate Minority Leader Mitch McConnell, and Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi to hammer out an agreement.
Obama proposed a scaled-back package today in what he considers an interim plan, Bloomberg reported, citing a Democratic aide with knowledge of the president's plans.
Reid said Thursday that Republicans are stalling in finding a solution, a comment that sunk equity markets. Later in the day, stocks rebounded after Republicans said they're prepared to work over the weekend to meet the Dec. 31 fiscal-cliff deadline.
Treasury Secretary Timothy Geithner said Wednesday he will do all he can to create a cushion for lawmakers. He said in a letter to Reid that the federal government will reach its $16.394 trillion statutory debt limit on Dec. 31.
Geithner said the Treasury is planning "extraordinary measures" to postpone defaulting on $200 billion in bond payments and create some "headroom" for Washington beyond New Year's Day.
The Dow Jones Industrial Average declined 158 points, or 1.2%, to 12,938.11 as of 4:03 p.m. New York time.
The S&P 500 fell 14 points, or 1%, to 1,403.96, bringing the week's decrease to 1.9%. It has risen 12% this year with only one trading day left.
The Nasdaq dropped 21.7 points, or 0.7%, to 2,964.21.
All 30 members of the Dow declined, with 18 dropping more than 1%. Computer and printer maker Hewlett-Packard(HPQ) fell 2.6%, the most of any company. Oil companies Chevron(CVX) and Exxon Mobil(XOM) dropped 1.9% and 2%, respectively.