US stocks closing: U.S. stocks were little changed on Thursday as the prospect of a drawn-out battle over impending tax and spending changes made investors wary of getting into the water, while retailer Wal-Mart tumbled after disappointing sales.
The S&P 500 is down nearly 2 percent for the week, adding to last week's selloff and eroding more of the market's gains for the year.
What had looked like a stellar 2012 for stocks has turned into merely an average year, and as 2012 draws to a close, investors are becoming more inclined to protect the gains they have.
The worry is the economy could contract again if no deal is reached in Washington to avoid the fiscal cliff - large, automatic budget cuts and tax hikes that begin to take effect in the new year.
Combined with the euro zone debt crisis, the uncertain outlook for corporations makes it hard to know how much a stock is worth, said Alan Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio.
Valuation is going to be uncertain because you don't know what the growth will be, said Lancz. That is definitely not a good scenario for someone to step up to the plate and do a lot of buying.
The euro zone relapsed into its second recession since 2009 in the third quarter as the region was hurt by its debt problems.
Wal-Mart fell 3.6 percent to $68.72 and was the biggest drag on the Dow as frugal consumers hurt the company's quarterly sales.
Investors will be watching Friday's meeting at the White House between President Barack Obama and Republican and Democratic leaders of Congress over deficit reduction for any sign the two sides are moving closer.
The memory of last year's political impasse over raising the debt ceiling has also made analysts nervous.
(There is) uncertainty of whether we're going to have a functioning government going forward. That is a weight that sits on markets right now, said Troy Logan, managing director and senior economist at Warren Financial Service in Exton, Pennsylvania.
Even if the economy avoids an outright recession, there are fears a lengthy political dispute could sap business investment and consumer spending.
The Dow Jones industrial average slipped 28.49 points, or 0.23 percent, to 12,542.46. The Standard & Poor's 500 Index lost 2.16 points, or 0.16 percent, to 1,353.33. The Nasdaq Composite Index was off 9.87 points, or 0.35 percent, to 2,836.94.
The S&P 500 sunk to a 3