U.S. stocks fall for fifth day, Treasuries gain as cliff looms

U.S. stocks fell for a fifth day, the longest slump since September, as lawmakers prepared for talks to avoid the fiscal cliff of spending cuts and tax increases looming in January. Treasuries extended a weekly gain.

The Standard & Poor’s 500 Index lost 0.8 percent as of 10:13 a.m. in New York, erasing its gain for December and trimming its yearly advance to 12 percent. Ten-year Treasury yields fell four basis points to 1.7 percent and the cost of insuring against a corporate default in Europe increased to a three-week high. Italian 10-year bonds reversed losses as demand increased at an auction of government debt.

U.S. congressional leaders plan to meet with President Barack Obama today and House Republicans said they will convene Dec. 30 as lawmakers seek to avoid the more than $600 billion in tax-and-spending changes.

“What the markets fear most is that we’re in this paralysis where the government is unable to govern, communicate and compromise,” Greg Peterson, director of investment research at Ballentine Partners LLC in Waltham, Massachusetts, which manages about $4.2 billion in assets, said by telephone. “There’s still hope in our minds that they can get something done but if they go off the cliff, it’s going to be serious.”

Weekly Decline

S&P 500 futures erased earlier gains before the open of exchanges in New York. The index is poised for a 0.8 percent weekly decline and today’s drop erased its advance for December.

Obama will meet at 3 p.m. Washington time with Republican House Speaker John Boehner and Senate Minority Leader Mitch McConnell, along with Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi, both Democrats. The president who had been negotiating one-on-one with Boehner.

Energy companies led losses among the 10 main industry groups in the S&P 500, with Valero Energy Corp. and Peabody Energy Corp. sliding about 2 percent each.

Home Depot Inc. and Lowe’s Cos. fell at least 0.9 percent. A U.S. dockworkers’ strike threatens possible port closings that could cut off shipments right before the lucrative gardening season. Teekay Tankers Ltd. paced losses in shipping firms.

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