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Stocks inch lower as investors wait on budget

NEW YORK (AP) — Stocks were inching lower on Wall Street Friday as lawmakers seek to thrash out a budget agreement. The government also reported that consumer spending fell in October.

The Dow Jones industrial average was down 20 points to 13,001 as of 11:58 a.m. Eastern. The Dow fluctuated between small gains and losses for much of the morning.

The Standard and Poor's 500 was down 2 points to 1,414. The Nasdaq composite was down six points to 3,006.

Stocks are also little changed for the week. The Dow is down 0.05 percent, the S&P 500 index is up 0.3 percent. The market has fluctuated between gains and losses in recent days as news and comments filtered out from the budget negotiations in Washington.

Investors have been closely following the talks between the White House and Congress over the "fiscal cliff," a series of sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit. Economists say that those measures, if implemented, could push the U.S. economy back into a recession.

"Right now the market is just going to be held hostage as to what happens in the next five hours, versus what's going to happen in the next five years," said Dan Veru, chief investment officer at Palisade Capital Management, in Fort Lee, New Jersey.

During a visit to the Philadelphia area, President Barack Obama is planning on insisting on higher taxes for the top 2 percent of earners. That's according to White House officials, who say Obama will cast Republicans as an obstacle to a deal. Republicans have said they are open to new tax revenue, but not higher tax rates.

"My sense is that investors are going to be busy reading headlines every day for the next three weeks," said Jack Ablin, chief investment officer at BMO Group in Chicago.

Ablin says that he expects policy makers to reach a temporary agreement on the budget before year-end, before coming to a "Grand Bargain" next year. He believes improving consumer confidence and rising house prices will underpin the economy and support demand for stocks.

Stocks are higher for the year. The Dow is up 6.4 percent, the S&P 500 index 12 percent. The indexes are on track to end the month little changed.

Americans cut back on spending last month and saw no growth in their income, reflecting disruption from Superstorm Sandy that could hold back economic growth in the final months of the year.

The Commerce Department reported that consumer spending dropped 0.2 percent in October. That's down from an increase of 0.8 percent in September and the weakest showing since May.

Among stocks making big moves:

—Yum Brands, which owns KFC, Pizza Hut and Taco Bell, fell $6.90 to $67.58. The fast-food operator reported disappointing sales and earnings forecasts. An analyst recommended that investors sell the stock.

—Zynga, the maker of computer games including "Farmville" and "Cityville," fell 17 cents to $2.45 after the company said late Thursday that it was loosening its relationship with Facebook.

—VeriSign plunged $5.50 to $33.83 after the company announced the terms of its new contract to run the key directories that keep track of ".com" domain names. The company won't be allowed to raise prices on the registration of such names without government approval.

—Duke Energy rose $1.10 to $63.49 after the company said its CEO will step down as part of a settlement with the North Carolina utilities regulator that ends an investigation into the company's takeover of in-state rival Progress Energy.

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