Stocks sink as budget deadline nears
Stocks closed down on Wall Street as a year-end deadline nears with no deal in hand to cut the US government's budget deficit. Telecommunications stocks and health care stocks fared the worst.
Stocks dipped Wednesday, recording their first loss of the week. President Barack Obama and Republicans in Congress sniped at each other, and a deadline to avoid sweeping tax increases and government spending cuts drew closer.
General Motors stock surged after the government announced plans to sell its ownership stake in the company.
The Dow Jones industrial average closed down 98.99 points, or 0.7 percent, at 13,251.97. The Standard & Poor's 500 index dropped 10.98 points, or 0.8 percent, to 1,435.81. The Nasdaq composite index fell 10.17, or 0.3 percent, to 3,044.36.
Obama said that he and House Speaker John Boehner were "pretty close" to a deal to avoid the tax increases and spending cuts, a combination known as the "fiscal cliff." The two sides have exchanged proposals this week.
But the president also said that congressional Republicans keep finding "ways to say no as opposed to finding ways to say yes." He said the nation deserves compromise in the aftermath of the Connecticut school shooting.
Boehner, speaking to reporters for less than a minute and in a defiant tone, called on Obama to offer a deficit-cutting plan balanced between spending cuts and tax increases.
He predicted that the House would pass his backup plan, which calls for extending decade-old tax cuts for Americans making less than $1 million per year. The White House has rejected that plan.
The S&P 500 index had gained more than 2 percent over the previous two days in part because of optimism about a deal taking shape. The optimism seemed to melt on Wednesday, and stocks finished near their lows for the day.
GM soared $1.69, or 6.6 percent, to $27.18 after the company said it would spend $5.5 billion to buy 200 million shares of its own stock back from the federal government.
The government pledged to sell the other 300 million GM shares it owns on the open market and shed its entire ownership stake in 12 to 15 months. The government got GM stock as part of a 2009 bailout.
U.S. builders broke ground on fewer homes in November after starting work in October at the fastest pace in four years. Superstorm Sandy probably distorted the totals in the Northeast.
The Commerce Department said builders began construction of houses and apartments at a seasonally adjusted annual rate of 861,000. That was 3 percent less than October's annual rate of 888,000, the fastest since July 2008.
Materials stocks fell just 0.5 percent, less than the rest of the market. Industrials fell 0.7 percent. Elsewhere on Wall Street, telecommunications stocks and health care stocks fared the worst, down 1.2 percent and 1.1 percent respectively.
Oracle, which makes software for businesses, jumped $1.21, or 3.7 percent, to $34.09 after reporting stronger earnings as companies splurged on software and other technology.
The yield on the benchmark 10-year U.S. Treasury note fell 0.02 percentage point to 1.80 percent. The price of oil climbed $1.58, or 1.8 percent, to $89.51 per barrel.
Among other stocks in the news:
— FedEx gained 84 cents, or 0.9 percent, to $93.20. The world's No. 2 package delivery company lowered its economic forecast for the United States but said it was more confident in its own ability to increase earnings.
— Martha Stewart Living Omnimedia gained 7cents to $2.65. It fell during the day to $2.30, a three-year low, after CEO Lisa Gersh stepped down after less than a year on the job.