By CHRISTINA REXRODE
NEW YORK (AP) â¿¿ On Monday, the stock market was as choppy as the "fiscal cliff" deal-making that has been yanking it around.
U.S. stocks struggled for direction on the last day of the year, with the "fiscal cliff" just hours away and Republicans and Democrats yet to hammer out a budget deal.
The Dow Jones industrial average opened lower, with investors disappointed that politicians hadn't reached an agreement over a weekend of terse, stop-and-go negotiating. With no clarity on whether a deal would get done, and what it would look like if it did, the Dow spent the morning flitting between small gains and losses.
The Dow and the other major stock indexes turned higher at midday after a few signs that a deal was emerging. The Associated Press and other media outlets reported that both sides had agreed on a few key points on taxes and unemployment benefits. President Barack Obama was scheduled to speak on the issue at 1:30 p.m. EST.
Around 1 p.m. EST, the Dow was up 42 points to 12,979. The Standard & Poor's 500 was up eight to 1,411. The Nasdaq composite index was up 29 to 2,989.
If politicians can't agree on a deal by midnight, then higher taxes and lower government spending will automatically kick in Tuesday â¿¿ the so-called fiscal cliff. That would hurt the economy, many investors believe. But what might hurt more, they add, is the psychological impact of knowing that the government that can't agree on a budget.
"We're having a fragile recovery, with the pain of 2008 still fresh on everybody's mind," said Joe Heider, principal at Rehmann Group outside Cleveland. "It's fear of the unknown. And fear is one of the greatest drivers of the financial markets."
It's difficult to discern how a deal, or lack of a deal, might affect the stock market. From mid-November through roughly mid-December, the stock market rose more or less steadily, despite the "fiscal cliff" looming on the horizon. It wasn't until shortly before Christmas that the "cliff" finally scared investors enough to send the market down.