Investors drew little hope Wednesday for a quick compromise in U.S. budget talks after President Barack Obama insisted that higher taxes on wealthy Americans would have to be part of any deal.
Stocks fell sharply, and even a signal from the Federal Reserve that it could launch a program in December to speed job growth failed to encourage investors. The Dow Jones industrial average dropped 185.23 points to close at 12,570.95.
Obama made clear he would seek higher tax revenue from the wealthiest Americans, which faces opposition among some Republicans in Congress. Obama said that a modest increase on the wealthy "is not going to break their backs."
Sal Arnuk of Themis Trading, a New Jersey brokerage, said, "The Street was looking for him to say some magic buzzwords about avoiding the 'fiscal cliff,' about cooperation." The fiscal cliff is a package of tax increases and government spending cuts that will take effect Jan. 1 unless the president and Congress reach a deal. They would total about $700 billion for 2013 and some fear it could result in a recession.
Stocks have fallen steadily since voters returned Obama and a divided Congress to power Nov. 6. The Dow has fallen 675 points, or 5.1 percent.