NEW YORK (AP) The stock market turned lower Thursday after Senate Majority Leader Harry Reid said the government appears headed over the so-called fiscal cliff because of a lack of progress in bipartisan negotiations.
In the last hour of trading, stocks have bounced back somewhat, with the Dow Jones industrial average off about 60 points, after falling more than 100 points earlier in the afternoon. This followed another development in the cliff drama -- word that the House will convene on Sunday.
In the morning, the government reported that the number of people seeking unemployment benefits over the past month fell to its lowest level since March 2008. But the figures were affected by the Christmas holiday.
Stocks are also still digesting this week's news that the holiday shopping season hasn't been as strong as retailers hoped, another sign that the economy is still struggling.
HOW MUCH WILL IT HURT?: Some say stocks will take 2% to 3% hit
Overall it was quiet, with many traders still on vacation and few major company announcements scheduled. It was the first day of post-Christmas trading for European markets, and most major indexes there rose.
In Washington, the "fiscal cliff" neared with no resolution to a budget standoff. Higher taxes and government spending cuts kick in next week if Republicans and Democrats can't reach a budget compromise by Dec. 31. The uncertainty has made investors pull money out of stocks.
The "fiscal cliff" talks gained an extra layer of urgency late Wednesday with the news that the government is going to hit its $16.4 trillion borrowing limit its so-called debt ceiling on Monday.
Treasury Secretary Tim Geithner told Congress that he would use accounting measures to try to save approximately $200 billion. But those are stopgap measures, which would keep the government from going over its borrowing limit for probably only a couple of months.
Chipmaker Marvell Technology Group dropped 4% after the company lost a patent case brought by Carnegie Mellon University. Marvell said it would fight the $1.2 billion ruling.
In Japan, the benchmark Nikkei 225 index rose to its highest close since March 2011. The country is preparing for the incoming, pro-business prime minister, Shinzo Abe. He has called for more public works spending to reinvigorate the economy, and measures to drag the country out of deflation, or steadily declining prices.