Dec. 28, 2012 at 9:57 AM ET
Stocks held modest losses in volatile trading Friday as traders reacted to "fiscal cliff" headlines from Washington and ahead of a White House summit later this afternoon.
Still, stocks pared session lows following a Bloomberg report that President Obama plans to offer a scaled-back plan to avoid some of the effects of tax and spending changes set to kick in early next year.
The Dow Jones Industrial Average recovered back above the psychologically-important 13,000 level after being down more than 100 points earlier. Hewlett-Packard and Chevron led the blue-chip laggards.
The S&P 500 and the Nasdaq also cut some of their losses. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, gained above 20.
All three major averages are on track to posting declines of more than 1 percent across the board for the week.
Among key S&P sectors, energy and materials held losses, while utilities turned higher.
"Traders are so cautious and investors are also worried," said Stephen Guilfoyle of Meridian Equity Partners. "You're going to see some headlines [from the meeting at the White House] so the market will move again later today."
President Barack Obama will meet congressional leaders from both parties at the White House later this afternoon, just days before the deadline to reach a deal or see the a series of automatic spending cuts and tax hikes come into force.
House Speaker John Boehner, Senate GOP leader Mitch McConnell, Senate Majority Leader Harry Reid, House Democratic Leader Nancy Pelosi and Vice President Joe Biden are scheduled to attend Friday's meeting. If a deal is not possible, Obama and the leaders would leave the resolution to the next Congress to address in January.
Stocks tumbled Thursday but recovered most of their intraday losses after the House of Representatives said it would reconvene this Sunday to resume budget talks.
On the economic front, pending home sales rose to the highest level in more than 2-1/2 years, climbing 1.7 percent in November, according to the National Association of Realtors.
And the Institute for Supply Management-Chicago said its index of Midwest business activity rose to 51.6 in December from 50.4 in November, edging past expectations for 51.0.
Hewlett-Packard confirmed that the Justice Department is looking into its allegations that Autonomy engaged in accounting fraud prior to its acquisition by HP last year.
Apple dipped after a Chinese court fined the iPhone maker $160,000 for hosting third-party applications on its App Store that were selling pirated electronic books, Xinhua news agency said. Apple shares have declined nearly 25 percent in the last three months. The stock hit an all-time high of $705 in mid-September.
Barnes & Noble jumped after British publisher Pearson said it will buy a 5 percent stake in the bookstore chain's digital Nook and college bookstore businesses for $89.5 million. Separately, Barnes & Noble said it expects holiday sales to be below forecasts and that its Nook business will not meet prior full-year 2013 projections.
Among airlines, Raymond James raised its price target on Delta Airlines, Southwest Airlines, U.S. Airways, Spirit Airlines and Alaska Air.
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