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Traders work on the floor of the New York Stock Exchange. (BRENDAN MCDERMID/REUTERS)
Traders work on the floor of the New York Stock Exchange. (BRENDAN MCDERMID/REUTERS)

The close: Stocks slump on fiscal cliff fears Add to ...

Stocks fell on Tuesday after the Senate majority leader said that talks on the U.S. budget have made little progress, raising concerns among investors that the United States could fail to avert the looming fiscal cliff.

The S&P 500 closed at 1398.94, down 7.35 points or 0.5 per cent. The blue-chip Dow Jones industrial average closed at 12,878.13, down 89.24 points or 0.7 per cent. In Canada, the S&P/TSX composite index closed at 12,111.63, down 73.42 points or 0.6 per cent.

Concerns about the fiscal cliff – or automatic tax increases and spending cuts in the new year if Washington fails to agree on a budget – had died down in recent sessions, especially with some voices saying that talks have been constructive. The S&P 500 had rallied for five straight days as of Friday and turned in its best weekly gain of the year last week.

The moves follow an upbeat report on U.S. home prices in September. The S&P/Case-Shiller index for 20 U.S. cities rose 3 per cent over last year, marking the fourth consecutive monthly increase.

The Conference Board’s consumer confidence index rose to 73.7 in November, up from 73.1 in October and a little better than economists’ expectations.

Bombardier Inc. rose 8 per cent after it signed a $7.8-billion (U.S.) deal with VistaJet for as many as 142 aircraft.

Research In Motion Ltd., whose shares had been on a tear in anticipation of a new BlackBerry platform in the new year, fell 10.1 per cent. While some analysts have upgraded their target prices on the stock, Morgan Stanley said on Tuesday that RIM can no longer compete with Apple or Samsung, even if BlackBerry 10 is well-received.

Key commodities declined. Crude oil rose to $87.78 a barrel, up 4 cents. Gold fell to $1,742.30 an ounce, down about $7.30.

Among Canadian commodity producers, Suncor Energy Inc. fell 1.3 per cent and Barrick Gold Corp. ell 1.6 per cent.

Among U.S. stocks, Hewlett-Packard Co. fell 3 per cent, Bank of America Corp. fell 1.8 per cent and Chevron Corp. fell 1.5 per cent.

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