NEW YORK – Stocks closed little-changed Tuesday on Wall Street as budget talks continued in Washington.
The Dow Jones industrial average closed down 13.82 points at 12,951.78 after trading in a narrow range of just 82 points. The Standard and Poor’s 500 was down 2.41 points to 1,407.05. The Nasdaq composite was down 5.51 at 2,996.69.
Investors are waiting on developments from Washington in the budget talks, which are aimed at avoiding the “fiscal cliff.” That refers to a series of sharp government spending cuts and tax increases that begin to kick in Jan. 1 and could eventually cause a recession.
President Barack Obama said Tuesday that a proposal by House Speaker John Boehner on Monday was “still out of balance.” Obama, in an interview with Bloomberg Television, insisted on higher taxes for wealthy Americans.
Republicans, led by Boehner, have balked at Obama’s proposal of $1.6 trillion in additional taxes over a decade, and Monday called for increasing the eligibility age for Medicare and lowering cost-of-living increases for Social Security benefits.
“Politicians are doing their negotiating dance. They both start out on their extreme positions. The question is how long until they get into the middle,” said Rex Macey, chief investment officer at Wilmington Trust Investment Advisors in Atlanta.
Among stocks making big moves, Darden Restaurants, owner of the Olive Garden, Red Lobster and LongHorn Steakhouse restaurant chains, fell $5.02, or 9.6 percent, to $47.40 after cutting its profit forecast for fiscal 2013.
Separately, analysts at Credit Suisse said that restaurant-goers would “quickly lose their appetite” if the U.S. went over the “cliff” because the tax increases and job cuts that would likely follow would curb discretionary spending.
Stock trading will likely become increasingly more volatile the longer talks progress without a deal, said JJ Kinahan, chief derivatives strategist at TD Ameritrade.
“If you looked back a week ago, most people were under the impression that we’d get this solved fairly quickly,” Kinahan said. “There hasn’t really been any positive news, or any positive movement, in the last few days, and with that it makes people more and more nervous.”