NEW YORK -- U.S. stocks fell sharply on Friday, denting weekly gains, after a Republican proposal to avert the fiscal cliff did not find support, reducing hopes for a budget deal before 2012 ends.
"If there is any policy maker that is not taking the fiscal cliff seriously, he should check with the Congressional Budget Office or check with any economist you can name, because it is very serious and it will lead to a recession if we go off the cliff," said Hugh Johnson, chairman of Hugh Johnson Advisors LLC. "It's for real."
The CBO forecasts a recession in the first half of
next year should the White House and Congress fail to reach a deal.
After falling as much as 189 points, the Dow Jones industrial average shed 120.88 points, or 0.9 percent, at 13,190.84, a level that has it up 0.4 percent from the week-ago close.
All but two of the Dow's 30 components finished in the red, led by Bank of America Corp., down 2 percent.
Tallying a 1.2 percent weekly gain, the S&P 500 index lost 13.54 points, or 0.9 percent, at 1,430.15. The Nasdaq composite index retreated 29.38 points, or 1 percent, at 3,021.01, leaving it up 1.7 percent on the week.
Shares of Research In Motion Ltd. fell almost 23 percent a day after the company's fiscal-third-quarter results, which beat estimates, but left investors fretting about changes to its high-margin services business and costs tied to the approaching launch of its new BlackBerry platform.
Friday's economic data was positive, especially a 0.7 percent November rise in orders for durable goods, according to Johnson. Still, investors would bypass the report, because the "focus is so overwhelmingly on Washington," he said.
Those fiscal-cliff concerns found their way into a gauge of consumer sentiment, which fell in December. The University of Michigan-Thomson Reuters consumer-sentiment index declined to a final December reading of 72.9, from 82.7 in November.
House Speaker John Boehner on Friday said House members, the Senate and President Barack Obama must continue work to avert the looming fiscal cliff of tax increases and spending cuts.
The Ohio Republican spoke a day after he dropped a proposal to allow higher taxes on yearly income of $1 million and up, because he did not have enough votes to pass it, with the House then going into recess. There are plans to return Dec. 27 in the event there is some sort of deal to consider.
"It's hard to imagine that we could have policy makers in elected office that are such ideologues in this day and age. But we do have them, and shame on them," Johnson said.