NEW YORK (Reuters) - Stocks fluctuated between small gains and losses on Tuesday after remarks by President Barack Obama on budget talks dented optimism a solution could be found to prevent the economy from falling into recession.
Obama rejected a Republican proposal to resolve a looming fiscal crisis as "still out of balance" and said any deal must include a rise in income tax rates on the wealthiest Americans.
Obama spoke in an interview with Bloomberg Television.
Republicans in Congress proposed steep spending cuts to bring down the budget deficit on Monday but gave no ground on Obama's call to raise tax rates on the rich. The proposal was quickly dismissed by the White House.
"We have more of the same and what that really means is that you see very public negotiations that seem to be going nowhere," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
"If there was any conviction that this was going to be a done deal, that we are going to see some really positive resolution on this fiscal cliff, you would see some real activity in the market."
The market has been sensitive to rhetoric from Washington, and many investors still expect the two sides eventually will reach a deal before the year's end, which could trigger a rally in equities.
Obama meets with U.S. governors at the White House on Tuesday to talk about the fiscal cliff, a $600 billion package of tax hikes and federal spending cuts that would begin January 1.
Volume was light, with about 3.34 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq.
Differences within the Republican Party over how to engage with the Democrats came to the fore on Tuesday as one senator opposed to raising taxes lashed out at House Speaker and fellow Republican John Boehner for proposing to increase revenue by closing some tax loopholes.
Despite the sudden moves in the market, a measure of investor anxiety has held surprisingly flat.
The CBOE volatility index <.vix>, a gauge of market anxiety, was at 17.36 but has not traded above 20 since July following its 2012 high near 28 hit in June. The VIX's 10-day Average True Range, an internal volatility measure, is at its lowest since early 2007.
Coach
The Dow Jones industrial average <.dji> added 16.60 points, or 0.13 percent, to 12,982.20. The Standard & Poor's 500 Index <.spx> dropped 0.27 point, or 0.02 percent, to 1,409.19. The Nasdaq Composite Index <.ixic> dipped 3.81 points, or 0.13 percent, to 2,998.39.
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(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)
Wall Street flat on lack of "fiscal cliff" progress
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Wall Street flat on lack of "fiscal cliff" progress
