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Stocks trim losses as House sets Sunday session over budget impasse

Sen. Harry Reid
Harry Reid, Nevada’s Democratic senator

Stocks on Thursday pared most of their early declines as the House of Representatives was said to plan a session on Sunday, fueling optimism a budget deal will be reached.

The Dow Jones industrial average closed down 18.28 points, or 0.14%, at 13,096.31; the S&P 500 fell 1.74 points, or 0.12%, ending at 1,418.09; and the Nasdaq composite closed down 4.25 points, or 0.14%, at 2,985.91. All numbers are preliminary.

Equities extended declines earlier as Senate Majority Leader Harry Reid, D-Nev., said a resolution to the budget dispute before Jan. 1 appeared unlikely because Republicans would not cooperate, pushing the U.S. closer to more than $600 billion in automatic tax increases and spending cuts set to begin in January.

However, stocks recovered as two party aides said the House will convene at 6:30 p.m. EST Sunday.

Treasury Secretary Timothy F. Geithner on Wednesday said the government will hit its statutory debt ceiling next Monday, and he will take “extraordinary measures” to postpone a U.S. default for about two months, allowing more time for lawmakers to agree on a deficit-reduction deal.

The S&P 500 fluctuated in early trading Thursday before turning lower after a report showed the budget impasse helped trigger a worse-than-forecast drop in the Conference Board's gauge of consumer confidence in December. The sentiment gauge slid to 65.1, down from the revised 71.5 reading for the prior month.

Other reports showed U.S. jobless claims fell by 12,000 to 350,000 last week, less than the 360,000 median estimate in a survey of economists. Purchases of new homes climbed 4.4% to a 377,000 annual pace, the most since April 2010, following a revised 361,000 rate in October, the Commerce Department reported Thursday.