Stocks Pare Losses as House Plans to Convene on 'Fiscal Cliff'
NEW YORK ( TheStreet) -- U.S. stocks pared losses on plans by the House of Representatives to meet over the weekend to hammer out a proposal to avert the so-called fiscal-cliff deadline of Dec. 31.
The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite each declined by only 0.1% after suffering losses of more than 1% earlier in the day, when Senate leader Harry Reid said Republicans are stalling in finding a solution.
"I don't know time-wise how it can happen now," said Reid, a Democrat, on the Senate floor in Washington. He said House Speaker John Boehner and Senate Minority Leader Mitch McConnell, both Republicans, are causing a stalemate. "Democrats can't put together a plan on their own because, without participation of Leader McConnell and Speaker Boehner, nothing can happen on the fiscal cliff."
The Senate resumed its work today after breaking for Christmas. Obama has urged Congress to put together an interim plan to ward off tax increases and spending cuts that would be triggered if the debt ceiling isn't raised.
Treasury Secretary Timothy Geithner said he will do all he can to create a cushion for lawmakers. After the stock market closed Wednesday, 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 president now has four days before the deadline, which prompted the House to convene over the weekend, a rare event. Economists say going off the fiscal cliff could lead to a recession, as growth is sluggish and business owners are cautious about hiring.
The Dow Jones Industrial Average declined 18 points, or 0.1%, to 13,096.31, as of the close at 4 p.m. New York time.
The economic calendar in the U.S. Thursday includes jobless claims, new-home sales and consumer confidence.
The number of Americans who applied for jobless claims dropped by 12,000 to 350,000 in the week ended Dec. 22, the Labor Department said. Economists forecast 360,000. Some of the claims were estimated because of the Christmas holiday.
In another report, new-home sales rose 4.4% to a 377,000 annual pace after a revised 361,000 in October, the Commerce Department said. That was the most since April 2010, another sign the housing market is rebounding.
Still, U.S. consumer confidence dropped to 65.1 in December from a revised 71.5 last month, according to the Conference Board.
Gold for February delivery was up $4.30 at $1,663.70 an ounce at the Comex division of the New York Mercantile Exchange, reversing earlier losses. February crude oil contracts were up 16 cents to $91.14 a barrel.