US STOCKS-Wall St sinks as 'fiscal cliff' fears escalate
* Confidence wilts after failure of Boehner bill
* Banking shares slide; Citigroup and BofA shares drop
* Herbalife shares fall again, down for 8th straight day
* Dow off 1.1 pct, S&P 500 down 1.1 pct, Nasdaq off 1.3 pct
By Gabriel Debenedetti
NEW YORK, Dec 21 (Reuters) - U.S. stocks slid on Friday after a Republican plan to avoid the "fiscal cliff" failed to gain support on Thursday night, shrinking hopes that a deal would be reached before the new year.
Trading was volatile as investors lost confidence in the prospect of a deal between the White House and Republicans. Lower volume ahead of the Christmas and New Year's holidays exaggerated market swings. The CBOE Volatility Index or VIX, the market's favored anxiety measure, rose 5 percent to 18.56, but was off the day's high.
Republican House Speaker John Boehner failed to garner enough votes even from his own party to pass his "Plan B" tax bill late on Thursday. This was the latest setback in negotiations to avoid $600 billion in tax hikes and spending cuts that some say could tip the U.S. economy into recession.
"The failure with Plan B was disappointing, if not terribly surprising, but now there's a real lack of clarity about what will happen, and markets hate that," said Mike Hennessy, managing director of investments for Morgan Creek in Chapel Hill, North Carolina. Continued...