The stock market shot higher on Monday even as the "fiscal cliff" neared. By the time trading ended, Republicans and Democrats still hadn't reached a budget compromise %u2014- but investors were betting that they would.
Working against a midnight deadline, negotiators for the White House and congressional Republicans in Congress narrowed their differences Monday on legislation to avert across-the-board tax increases.
Stocks fell for a fifth day on concern that Washington lawmakers will fail to reach a budget deal before a self-imposed year-end deadline.
The stock market erased most of an early loss in late trading after Republicans said they would reconvene the House of Representatives Sunday in hopes of piecing together a last-minute budget deal. Still the Dow closed down 18 points for its fourth straight loss.
Stocks fell Thursday, putting the market on track for its fourth straight loss, after consumer confidence fell sharply in December as Americans worried about higher taxes and government spending cuts.
Even if New Year's passes with no deficit reduction deal, businesses and consumers would not likely panic as long as some agreement seems imminent. The $671 billion in tax increases and spending cuts could be retroactively repealed, and the impact of the tax increases would be felt only gradually.
Stocks opened sharply lower Friday on Wall Street after House Republicans called off a vote on tax rates and left federal budget talks in disarray 10 days before sweeping tax increases and government spending cuts take effect.
The GOP-controlled House is moving ahead Thursday on a bill that would raise taxes on people earning over $1 million a year, sparing most workers from a tax hike but leaving in place painful budget cuts to the military and domestic agencies as "fiscal cliff" talks appear stalled.
President Obama's offer to limit the growth of Social Security benefits would cost the average retiree less than $50 in the first year. But the cuts would grow over time, and that has advocates for seniors worried that Democrats in Congress will break their promise to shield the program from cuts in deficit reduction talks.
Just two weeks before the economy-threatening "fiscal cliff" is due to kick in, both President Barack Obama and House Speaker John Boehner are making significant concessions to each other, backing off what had once been ironclad positions on how to avoid the huge automatic spending cuts and tax increases.
