Fiscal cliff fears send Wall St shares diving

US stocks slid yesterday in a choppy session, losing ground in the last hour before the close after Senate Majority Leader Harry Reid expressed disappointment that there has been “little progress” in dealing with the fiscal cliff.

The market was flat for most of the session but fell sharply after Reid’s comments, a signal that investors remain skittish about the wrangling in Washington. The CBOE Volatility Index, or VIX, rose on Reid’s words.

“It may be that the market feels the goodwill before Thanksgiving is evolving into more political intransigence,” said Quincy Krosby, at Prudential Financial.

Markets are focused on whether Congress and the White House can agree on ways to avoid some $600bn in automatic spending cuts and tax increases that are due to kick in early next year.

As budget talks linger, Las Vegas Sands and Supertex added their names to a growing list of companies announcing special dividends aimed at helping investors avoid a possibly higher tax burden next year.

Higher dividend and capital gains taxes are part of the negotiations in Washington and may rise even if a deal is crafted.

Las Vegas Sands jumped 5.3 per cent to $46.36. Supertex rose 6.9 per cent to $18.

The VIX shot up 2.7 per cent to 15.92 at the close.

The Dow Jones industrial average fell 89.24 points, or 0.69 per cent, to 12,878.13 at the close. The S&P 500 dropped 7.35 points, or 0.52 per cent, to finish at 1,398.94. The Nasdaq Composite lost 8.99 points, or 0.30 per cent, to end at 2,967.79.