U.S. stocks drop as fiscal cliff progress hits snag, Dow loses 0.91%

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Investing.com - U.S. stock prices dropped on Friday after congressional Republicans moved against fiscal reforms proposed by House Speaker John Boehner to avoid a year-end fiscal cliff.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.91%, the S&P 500 index was down 0.94%, while the Nasdaq Composite index fell 0.96%.

Republicans in the U.S. House of Representatives late Thursday canceled plans to vote on fiscal proposals drafted by Speaker Boehner, himself a Republican, which called for tax hikes on incomes over USD1 million, well above a White House proposal calling for tax hikes on incomes topping USD400,000.

Critics said the bill didn't address spending cuts enough.

Stocks fell on the news as failure to push fiscal reforms today will allow tax breaks in place now to expire as scheduled at the end of this year, right when deep spending cuts kick in, a combination known as a fiscal cliff that could throw the country into a recession next year if left unchecked by Congress.

Fiscal uncertainty served as the market's chief steering current throughout the day.

Elsewhere, the U.S. Census Bureau reported earlier that core durable goods orders, which exclude transportation items, rose 1.6% in November, beating market expectations for a 0.2% decline though down slightly from a 1.9% increase the previous month.

Durable goods orders rose by 0.7% last month, outpacing consensus forecasts for a 0.2% rise though down from a 1.1% increase in October.

Meanwhile, a separate Commerce Department report revealed that personal spending in the U.S. rose by 0.4% in November, beating expectations for a 0.3% rise and far outpacing 0.1% fall the previous month.

Also in the U.S. earlier, the Thomson Reuters/University of Michigan's consumer sentiment index slumped unexpectedly in December, possibly due to fears the U.S. will careen over the fiscal cliff.

The index dipped to 72.9 for December from 74.5 the previous month, missing analysts' call for an improvement to 74.7 this month.

Leading Dow Jones Industrial Average performers included American Express, up 0.44%, McDonald's Corp., up 0.16%, and Boeing, down 0.04%.

The Dow Jones Industrial Average's worst performers included Bank of America, down 2.00%, Exxon Mobil, down 1.87%, and Walt Disney, down 1.83%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 0.27%, France's CAC 40 fell 0.15%, while Germany's DAX 30 finished down 0.47%. Meanwhile, in the U.K. the FTSE 100 lost 0.31%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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