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November 29, 2012

Stock gains dented over twists in budget talks

NEW YORK — An early gain on the stock market shrank Thursday after House Speaker John Boehner said little progress was being made in budget talks in Washington.

The Dow Jones industrial average had been up as much as 77 points in morning trading Thursday, then briefly turned negative after Boehner's remarks at 11:30 a.m. Eastern. Shortly after noon the Dow was up 20 points at 13,005.

The Standard & Poor's 500 was up four points at 1,414 and the Nasdaq was up 15 at 3,006.

The market got off to a strong start following several positive economic reports, including a higher estimate of third-quarter U.S. economic growth, an increase in home sales and a drop in claims for unemployment benefits.

Following a meeting with Treasury Secretary Tim Geithner, Boehner told reporters that Democrats still haven't said which cuts they would accept to government benefit programs, suggesting a final budget deal remains a long way off. Republicans have said that they are open to increasing tax revenues as part of an agreement but only if they're accompanied by significant cuts to spending.

Investors have been closely following the talks between the White House and Congress over the "fiscal cliff", sharp government spending cuts and tax increases scheduled to start Jan. 1. New developments in the talks have whipsawed the market.

"It's a headline-watching market with this fiscal cliff," said David Brown, chief market strategist of the investment research firm Sabrient Systems.

Brown says the ongoing negotiations are likely to cause the stock market to take sudden turns in the weeks ahead. "But things seem to be moving in the right direction," Brown said. "I don't think either party wants to get pinned with hurting the market or the economy."

The up-and-down pattern in the market has left the Dow and S&P 500 little changed this week.

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