Stocks are riding roller coaster to edge of fiscal cliff

NEW YORK - The fiscal cliff took the stock market on a roller coaster Thursday. Small developments in the tense budget standoff yanked stocks back and forth throughout the day.

In the end, U.S. stocks closed lower for the fourth day in a row, sending the message that the budget standoff is still far from solved, the economy still far from healed.

Stocks trimmed their losses but still closed lower. The Dow finished down 18.28 points at 13,096.31. The Standard & Poor's 500 index fell 1.73 to 1,418.10. The Nasdaq composite index lost 4.25 to 2,985.91.

The erratic performance underscored how the fiscal cliff can yank the market back and forth. The term refers to automatic tax increases and government spending cuts that will kick in next week if Republicans and Democrats can't reach a budget agreement by Monday night.

Stocks opened by hopping between small gains and losses, pulled up by news about fewer unemployment claims and down by the continuing lack of a budget deal in Washington.

Then stocks turned decisively downward at midmorning, unnerved by two things: a report that consumer confidence fell to its lowest level since August, and a warning from the Senate majority leader, Democrat Harry Reid, that he feared the government would miss the Monday night deadline for working out a budget compromise.

A bright spot of economic news, an increase in sales of new homes, could not distract investors from worries about the budget impasse. Both Republicans and Democrats demanded that the other side take the initiative in compromising. The Dow Jones industrial average fell as much as 150 points, more than 1 percent.

Then, just as the Dow appeared headed toward a triple-digit loss, it whipsawed again, after House leaders announced in the late afternoon that the chamber would meet Sunday evening to work on the budget.

Until recently, investors were treating the fiscal cliff with a measure of nonchalance. Stocks rose more or less steadily from mid-November until late last week.

But now, with the deadline just days away and no deal in sight, more investors are paying attention.

"This is a matter of a few personalities. It isn't something where you can analyze spreadsheets to figure out what's going on," said David Kelly, chief global strategist at JPMorgan Funds. "There are very few investors on one side or the other who have wanted to make a strong bet on this one."