Stocks are down nearly 1.4 percent as a setback in talks to avert the looming "fiscal cliff" have rattled investors. The S&P 500 is having its biggest drop since November 7.
Speaker Boehner said in a press conference this morning that the failure to vote on the tax bill was not the outcome he wanted. "Unless the President and Congress take action," Boehner said, "tax rates will go up on every American taxpayer and devastating defense cuts will go into effect in 10 days." But he did leave the door open to working with Democrats on the problem.
With time running short to find a solution before Christmas, the White House said it would work with Congress to avoid the series of tax increases and spending cuts set to kick in at the start of next year. President Barack Obama said he was hopeful a deal can be reached quickly.
The Dow Jones Industrial Average is off 1.4 percent, led by losses in shares of Bank of America and Caterpillar.
The S&P 500 and the Nasdaq were both also down more than 1 percent. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, spiked to near 20.
Among S&P sectors, energy and financials are pacing declines.
"The odds of the U.S. slipping over the fiscal cliff have clearly risen. In a moment of bad political misjudgement, John Boehner tried to take a deal through Congress that clearly failed to have the President's support, only for it to be rejected by hawks in his own party," Rebecca O'Keeffe, head of investment at Interactive Investor said in a morning note.
"The market still expects agreement to be reached, but as we head towards the final week of the year, many investors will be reluctant to hang up their stockings and take a break as the issue goes down to the wire."
Barry Knapp, head of U.S. equity portfolio strategy at Barclays, said he thought the market was vulnerable to selling pressure even in a best case scenario. "Between now and when we finally get something done, we should be at 1,325 or 1,300 on the S&P," he told CNBC this morning.
The fiscal cliff wrangling overshadowed some better-than-anticipated economic data. November personal income rose 0.6 percent while spending increased 0.4 percent. Economists polled by Thomson Reuters forecast income rose by 0.3 percent and spending rose by 0.4 percent.
Durable orders data for November, meanwhile, rose 0.7 percent. Economists polled by Reuters forecast growth in orders will remain at 0.5 percent. Orders rose 1.1 percent in October.
The University of Michigan Consumer Sentiment survey for December came in at 72.9, down from 82.7 in November and lower than the 74.5 economists were expecting.
Research In Motion shares tumbled after reporting a drop in subscriber rolls for the first time in its history. It also worried investors during a conference call in saying it plans to alter its service revenue model. CEO Thorsten Heins told CNBC that worries about falling service revenue during the transition to BlackBerry 10 are unfounded.
Micron lost $0.27 per share in the fiscal first quarter, seven cents wider than analysts had anticipated. Revenue also came in below consensus, as the chipmaker suffered the effects of slowing personal computer sales and overall economic uncertainty.
Red Hat reported third-quarter profit of $0.29 per share, in line with estimates, with revenue exceeding estimates. The provider of Linux software saw strong growth in its subscription business.
Nike earned $1.14 per share for its second quarter, 14 cents above estimates, with revenue in line with estimates. Gross margin fell for the eighth straight quarter, but that streak could end soon based on the athletic footwear and apparel maker's current financial projections.
Drugstore chain Walgreen reported a fiscal first-quarter profit of $0.58 per share, excluding certain items, well below estimates of $0.70. Revenue also was slightly short of estimates. Walgreen said non-operational factors weighed on results, but the underlying business remains strong.