Stocks drop on doubts over ‘fiscal cliff ’ deal

Investors sent Washington a reminder that Wall Street is a power player in talks to avoid the “fiscal cliff.”

Stocks fell sharply Friday after House Republicans called off a vote on tax rates and left federal budget talks in disarray 10 days before sweeping tax increases and government spending cuts are scheduled to take effect.

The Dow Jones industrial average lost as much as 189 points before closing down 120.88 points, or 0.9%, at 13,190.84. The Standard & Poor’s 500 index fell 13.54 points to 1,430.15. Nasdaq declined 29.38 to 3,021.01.

The House bill would have raised taxes on Americans making at least $1 million per year and locked in decade-old tax cuts for those making less. Taxes will rise Jan. 1 for almost all Americans unless Congress acts.

Other markets registered concern, but the reaction was not extreme. The yield on the benchmark 10year U.S. Treasury note fell 0.03 of a percentage point to 1.76%.

The price of gold, which some investors buy when fear overtakes the market, climbed, but only by 0.9%. Gold rose $14.20 to $1,660.10 an ounce.

Among stocks making big moves, Research in Motion dropped $2.21, or 15.8%, to $11.74. The company said it won’t generate as much revenue from telecommunications carriers once it releases the BlackBerry 10.