US STOCKS-Wall Street drops 1 pct, fiscal deal unlikely before 2013

Fri Dec 21, 2012 10:01am EST
 
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* Failure of Boehner's bill suggests compromise difficult

* Banking shares tumble, Citigroup and BofA shares drop

* Nike results beat expectations; RIM shares slump in US

* Indexes down: Dow 1 pct, S&P 1.1 pct, Nasdaq 1.5 pct

By Ryan Vlastelica

NEW YORK, Dec 21 (Reuters) - U.S stocks sank more than 1 percent on Friday after a Republican proposal for averting the "fiscal cliff" failed to pass, diminishing hopes a deal would be reached soon in Washington.

Trading is expected to be volatile as investors view a fiscal agreement between the White House and Republicans before the year-end as increasingly unlikely. With volume thin ahead of the holidays, market swings could be amplified. The CBOE Volatility index jumped 11.5 percent.

Late on Thursday, Republican House Speaker John Boehner conceded there were insufficient votes from his party to pass a tax bill, dubbed "Plan B," to help avert the cliff, $600 billion of tax hikes and spending cuts due to start in January that could tip the economy into recession.

Plan B had called for tax increases on those who earn $1 million a more a year, and the bill's failure suggested it would be difficult to get Republican support for the more expansive tax increases Obama has urged, making it less likely an agreement will be reached between the White House and Republicans before the end of the year.   Continued...