Wall Street flags as debt talks stall

US stocks faded in the afternoon yesterday to end mostly lower, with investors skeptical a key vote by Congress would lead to a deal to avoid a US default.

The S&P 500 fell for a fourth straight day as buyers kept to the sidelines while lawmakers tried to hash out an agreement on the deficit.

The Dow Jones industrial average ended down 62.44 points, or 0.51 per cent, at 12,240.11. The Standard & Poor’s 500 Index was down 4.22 points, or 0.32 per cent, at 1,300.67. The Nasdaq Composite Index finished up 1.46 points, or 0.05 per cent, at 2,766.25.

A vote on a Republican-led bill to raise the debt limit was expected after the close of trading yesterday in the US House of Representatives. The Democratic-controlled Senate is crafting a competing bill, and Democratic leaders have said the House bill will be defeated in the Senate.

“During the course of the day, it became clear that even if [Republican House Speaker John] Boehner does get the vote, when it's turned over to the Senate, the Senate is going to reject it. That seems to be the reason for the selling into strength,” said Quincy Krosby, market strategist at Prudential Financial.

Analysts said dissension among the ranks of lawmakers has also made investors less certain that a deal can happen.

The wrangling over the US deficit has boosted volatility as stocks have fallen. The S&P 500 is down 3.3 per cent on the week and the market's fear gauge, the CBOE Volatility Index, rose above 23, the highest since mid-June.

“The lack of leadership has optimism flying at a very low altitude... It’s basically leaving investors very skittish,” said Steve Goldman, market strategist with Weeden & Co.

Stocks got an early lift from a dip in jobless claims and strong pending US home sales data, a day after the S&P 500 had its biggest fall in eight weeks.

Among gainers, Green Mountain Coffee Roasters jumped 16.4 per cent to $102.57 after the company said late Wednesday its third-quarter sales rose 18 per cent. Green Mountain was the top percentage gainer on the Nasdaq, which ended slightly higher.

Exxon Mobil Corp, the world's largest publicly traded oil company, however, reported results that fell short of expectations and its stock fell 2.2 percent to $81.46.

Also on the downside were shares of internet delivery company Akamai Technologies, a day after it lowered its revenue growth target.