After moving sharply lower over the course of morning trading on Thursday, stocks staged a substantial recovery attempt late in the session before ending the day roughly flat. Uncertainty about the looming fiscal cliff contributed to the volatility on Wall Street.
The major averages briefly peeked into positive territory in the final hour of trading but finished the session in the red. The Dow edged down 18.28 points or 0.1 percent to 13,096.31, the Nasdaq slipped 4.25 points or 0.1 percent at 2,985.91 and the S&P 500 dipped 1.74 points or 0.1 percent at 1,418.09.
While the major averages ended the session well off their worst levels, the modest losses on the day still extended a recent downward move.
The weakness seen for much of the session came amid continued concerns about whether lawmakers in Washington will be able to reach a budget agreement, with Senate Majority Leader Harry Reid, D-Nev., saying it "looks like" the country is headed over the fiscal cliff.
Reid sought to blame House Speaker John Boehner, R-Ohio, for the predicament and once again urged the Republican leader to allow the House to vote on a Senate-approved bill extending the tax cuts on income up to $250,000 a year.
Unless Congress acts, approximately $600 billion in automatic tax increases and government spending cuts are due to go into effect at the end of the year.
However, stocks bounced well off their worst levels on the heels of news that the House will reconvene Sunday evening, just a little over a day before the year-end deadline.
The news about the last minute session in the House generated optimism about the possibility of lawmakers reaching an eleventh-hour deal.
Reflecting the potential impact of going over the cliff, the Conference Board released a report showing that U.S. consumer confidence fell to a four-month low in December amid a substantial deterioration in expectations for the months ahead.
The Conference Board said its consumer confidence index fell to 65.1 in December from a downwardly revised 71.5 in November. Economists had been expecting the index to dip to 70.0 from the 73.7 originally reported for the previous month.
Meanwhile, traders largely shrugged off a separate report from the Labor Department showing an unexpected drop in initial jobless claims in the week ended December 22nd.
The Commerce Department also released a report showing a rebound by November new home sales, which reached their highest level in over two years.
Following the late-day recovery, most of the major sectors ended the day showing only modest moves, contributing to the roughly flat close by the broader markets.
While some weakness remained visible among banking, networking, and airline stocks, gold stocks moved moderately higher on the day along with the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.
The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index closed only just above the unchanged line, the German DAX Index edged up by 0.3 percent and the French CAC 40 Index climbed 0.6 percent.
In the bond market, treasuries moved notably higher amid worries about the fiscal cliff. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.3 basis points to 1.715 percent.
Developments in Washington are likely to remain in focus on Friday, although traders may also keep an eye on reports on Chicago-area business activity and pending home sales.
by RTT Staff Writer
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