NEW YORK - Stocks fell for a fifth day on concern that lawmakers will fail to reach a budget deal before a self-imposed year-end deadline.
The five-day losing streak for the Dow Jones industrial average was the longest since July.
The Dow dropped 158.20 points to 12,938.11 points, with losses accelerating in the last 20 minutes of trading as reports circulated that President Obama would not make a new budget proposal in a meeting with congressional leaders.
The Standard & Poor's 500 index fell 15.67 points to 1,402.43, its longest losing streak in three months, and the Nasdaq index dropped 25.59 points to 2,960.31.
Despite the fiscal gridlock in Washington, major stock indexes are holding on to gains for the year. The Dow is up 5.9 percent, the S&P 500 index is 11.5 percent higher, and the Nasdaq is up 13.6 percent.
A measure of Americans who signed contracts to buy homes increased last month to its highest level in 21/2 years, the latest sign of improvement in the housing market. The National Association of Realtors said Friday that its seasonally adjusted index of pending home sales rose to its highest since April 2010.
The Institute of Supply Management's Chicago-area purchasing managers index for December came in at 51.6, beating estimates for a gain to 51.