Stocks fell in light trading Monday during a shortened holiday trading session with lawmakers running out of time to reach a budget deal that would prevent the U.S. from going over the so-called fiscal cliff.

The Dow Jones industrial average fell 52 points to 13,139.08. The Standard & Poor's 500 index gave up 3 points to 1,426.66 The Nasdaq composite slipped 8.4 points to 3,012.60.

"There is starting to become a little bit of an acceptance that we fall off the fiscal cliff," said JJ Kinahan, chief derivatives strategist for TD Ameritrade. "People are starting to think about how they may plan their portfolio if that does happen."

Stocks fell sharply Friday, with the Dow logging its biggest drop in more than a month, after House Republicans called off a vote on tax rates. That left federal budget talks in disarray just days before sweeping tax increases and government spending cuts are set to take effect.

J.C. Penney Co.'s stock jumped after Oppenheimer analysts reiterated a "Buy" rating on the company Monday, saying that traffic in stores in the final weekend before Christmas was strong. The analysts said that this made them more optimistic that the company's new approach to promotion will help it into 2013.

The stock gained 28 cents, or 1.4 percent, to $19.87.

Falling stocks outnumbered gainers by a ratio of five to one in the 30-member Dow, with technology companies leading the decliners. Hewlett-Packard fell 33 cents, or 2.3 percent, to $14.01 and Microsoft Corp. dropped 39 cents, or 1.4 percent, to $27.06.

Stocks may also come under pressure in coming days as investors who have seen their holdings gain this year decide to sell and book the capital gains tax in 2012 so as to avoid any potential increase in that tax rate next year, according to Kinahan, of TD Ameritrade.

"People who have had a nice year in a particular stock may say 'why not take the hit this year,' " said Kinahan.

Barring a dramatic sell-off in the year's final days of trading, stocks will end the year higher on signs that the U.S. housing market is recovering and the U.S. economy is adding jobs.

The S&P 500 is 13 percent higher for the year, the Dow is up almost 8 percent, and the Nasdaq is nearly 16 percent higher.

Trading volumes were lower than average Monday before the Christmas holiday. The stock market will reopen Wednesday.

The yield on the 10-year Treasury note rose 1 basis point to 1.78 percent.

Herbalife Ltd., the nutritional supplements company, fell $1.21, or 4.4 percent, to $26.06. The stock has tumbled 43 percent this month after William Ackman, the founder and CEO of hedge fund Pershing Square Capital Management L.P., claimed that the nutritional supplements company is a pyramid scheme.