* Media report could indicate progress on deficit talks
* S&P 500 heading for second straight week of losses
* Dell shares decline as profit slides 47 percent
* Indexes down; Dow 0.2 pct; S&P 0.4 pct; Nasdaq 0.3 pct
By Angela Moon
NEW YORK, Nov 16 (Reuters) - U.S. stocks fell moderately on
Friday in an atmosphere of caution as President Barack Obama and
congressional leaders began bargaining on a deal to avoid major
tax hikes and spending cuts.
The looming "fiscal cliff" has become the market's main
focus since Obama's re-election on Nov. 6, sending stocks lower
on fears it could knock the economy into recession next year.
The S&P 500 was on track to decline for a fourth day.
"Today is the most important day of the week, as finally the
president will have a coffee talk with both Republican and
Democratic leaders. While both sides are now using the 'balance'
word, the rhetoric seems to have only been on the tax side,
which solves little or nothing on the spending side," said Peter
Boockvar, managing director at Miller Tabak & Co in New York.
If investors like what they hear after the meeting, "the
market is very oversold, sentiment is negative and is thus set
up for a short-term bounce," he said.
Futures had indicated a higher open after the Wall Street
Journal reported White House officials were in discussions that
could indicate increased flexibility in negotiations with
Republicans. Still, caution remains and the S&P 500 is on track
to end the week at least 2 percent lower.
Citing sources familiar with the matter, the Journal said
officials were in advanced, internal talks to replace spending
cuts set to begin in January with a separate package of spending
cuts and tax increases. The White House had no comment on the
Democrats and Republicans have recently appeared to dig in
their heels into opposing positions, echoing last year's
political impasse over raising the U.S. debt ceiling.
The S&P is down 4.3 percent over the past two weeks, with
such sectors as financials and materials among
the hardest hit.
Energy shares have been stronger as crude oil advanced. A
flare-up in violence in the Middle East lifted oil prices on
concerns about a possible supply disruption. Brent crude
is up 3 percent over the past two weeks.
The Dow Jones industrial average was down 27.03
points, or 0.22 percent, at 12,515.35. The Standard & Poor's 500
Index was down 5.11 points, or 0.38 percent, at 1,348.22.
The Nasdaq Composite Index was down 9.66 points, or 0.34
percent, at 2,827.28.
The S&P and the Dow are currently down about 2.3 percent for
the week while the Nasdaq is down about 2.7 percent.
Dell Inc's stock slumped 8.1 percent to $8.80 and
was the biggest percentage decliner on the S&P 500 a day after
reporting a steep drop in its quarterly profit.
Shares of Penn National Gaming Inc jumped 30
percent to $48.65 after the owner of gaming and pari-mutuel
properties said late Thursday it will split its business into
two separate publicly traded companies - a gaming focused real
estate investment trust and a gaming operator.
Sears Holdings Corp late Thursday reported a
quarterly loss that was narrower than expected, but same-store
sales fell on weak demand for electronics, sending shares down
14.8 percent to $49.80.
J.M. Smucker Co reported a rise in second-quarter
earnings, helped by a drop in commodity costs, but the stock
fell 3.4 percent to $82.45.