Stocks slide on ‘fiscal cliff’ warning

NEW YORK — Stocks slumped on Wall Street Tuesday after Senate Majority Leader Harry Reid said he was frustrated by the lack of progress in talks over the U.S. budget impasse in Washington.

The Dow Jones industrial average closed down 89.24 points to 12,878.13. The Dow and other indexes had been moving between small gains and losses for most of the day, then turned lower after Reid’s comments in the early afternoon.

“We have to get away from the happy talk and start talking about specific things,” Reid told reporters in televised comments.

The Standard & Poor’s 500 lost 7.35 points to 1,398.94 and the Nasdaq composite index lost 8.99 points to 2,967.79.

Worries about the budget talks have been hanging over the stock market for weeks. Stocks slumped immediately after the Nov. 6 election over concerns politicians would be unable to reach a deal to trim the deficit before a Jan. 1 deadline.

If that deadline isn’t met, under current law a series of sharp tax increases and spending cuts will go into effect. Economists have warned the measures could push the economy back into a recession. That deadline has come to be known as the “fiscal cliff.”

Two reports that suggested that the outlook for the U.S. economy may be improving failed to encourage investors to push stocks higher.

Consumer confidence rose this month to the highest level in almost five years, pushed up by steady improvement in hiring. The Conference Board’s consumer confidence index rose to 73.7 in November from 73.1 in October. Both are the best readings since February 2008.

The government reported separately that U.S. companies increased their orders of machinery and equipment last month, a sign business investment is rising. Orders rose 1.7 percent in October, the best showing since a 2.3 percent rise in May.

The yield on the 10-year Treasury note edged down to 1.65 percent.