* Senate Democratic leader sees no agreement on cliff
* Consumer confidence hits four-month low
* Initial jobless claims near 4 1/2-year low
* Dow down 0.8 pct, S&P 500 off 1 pct, Nasdaq down 1 pct
By Edward Krudy
NEW YORK, Dec 27 (Reuters) - U.S. stocks fell for a fourth
day on Thursday, sliding to session lows at midday as a measure
of investor anxiety hit its highest in five months after a top
Senate Democrat warned that an agreement to avoid fiscal
austerity measures would not be reached by the end-of-year
The comments by Senate Majority Leader Harry Reid just days
before the hefty tax hikes and spending cuts go into effect
pushed stocks down to the day's lows. The S&P 500 is now down
2.7 percent over the last four days, its worst such run in over
A four-day drop would also mark the S&P 500's longest losing
streak in three months as Wall Street wakes up to the
possibility that a "fiscal cliff" deal may not be reached until
The CBOE VIX volatility index, a measure of investor
fear, jumped above 20 for the first time since July, climbing
nearly 5 percent in another sign of growing concern. Investors
fear the so-called fiscal cliff could push the U.S. economy into
recession next year.
The VIX's "recent spike seems to suggest that market
participants are bracing for a rather significant uptick in
market volatility in early 2013," WhatsTrading.com options
strategist Frederic Ruffy said.
Reid, the Senate majority leader, criticized Republicans for
refusing to go along with any tax increases as part of a
compromise solution with Democrats. Referring to the fiscal
cliff, he said: "It looks like where we're headed."
The Dow Jones industrial average slid 101.84 points,
or 0.78 percent, to 13,012.75. The Standard & Poor's 500 Index
lost 13.46 points, or 0.95 percent, to 1,406.37. The
Nasdaq Composite Index dropped 29.51 points, or 0.99
percent, to 2,960.65.
Frank Lesh, a futures analyst and broker at Futurepath
Trading in Chicago, said his clients have been delaying trading
due to uncertainty about the negotiations' outcome, making the
year-end period quieter than usual.
"With the added drama in Washington, we have got even more
people sidelined," he said. "No one knows how this turns out or
how the markets are going to react to it."
President Barack Obama was flying back to Washington from a
Christmas holiday in Hawaii to push for more talks, while the
top Republican in Congress planned to speak with House
lawmakers. Still, gaps remained between the two
Treasury Secretary Timothy Geithner announced the first of a
series of measures that should push back the date when the U.S.
government will exceed its legal borrowing authority - a limit
known as the debt ceiling - by about two months.
Economic data also seemed to confirm worries about the
impact the fiscal cliff may have on the economy.
The Conference Board, an industry group, said its index of
consumer attitudes in December fell to 65.1 as the budget crisis
dented a growing sense of optimism about the economy. The gauge
fell more than expected from a downwardly revised 71.5 in
However, the job market continues to mend. Initial claims
for unemployment benefits dropped 12,000 to a seasonally
adjusted 350,000 last week and the four-week moving average fell
to the lowest since March 2008.
Marvell Technology Group fell 3.5 percent to $7.14
after it said it would seek to overturn a jury's finding of
patent infringement. The stock had fallen more than 10 percent
in the previous session after a federal jury found the company
infringed two patents held by Carnegie Mellon University and
ordered the chipmaker to pay $1.17 billion in damages.