U.S. Stocks Lower on Debt Impasse; Dunkin Jumps

U.S. stocks fell for a fourth straight session Wednesday amid signs of economic softness and a deepening impasse on the debt crisis in Washington, D.C.

The Dow Jones Industrial Average dropped 99 points, or 0.8%, to 12402, the Standard & Poor's 500-stock index fell 17 points, or 1.3%, to 1315 and the Nasdaq Composite lost 51 points, or 1.8%, to 2789. The Dow has shed more than 300 points over the course of its losing streak.

The Dow Jones Industrial Average tumbled, led by Cisco [CSCO 15.7801 -0.5099 (-3.13%) ] and Caterpillar [CAT 101.7727 -3.4273 (-3.26%) ], after closing lower for the third-straight session.

The S&P 500 and the tech-heavy Nasdaq were also sharply lower. The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped above 22.

All three major averages are in negative territory for the week.

Most S&P sectors were lower, led by industrials and techs.

debt bill until Thursday. Most people still expect a last-minute deal but it is still likely the rating agencies could downgrade the nation's credit rating.

The Congressional Budget Office estimated that the plan by Senate Majority Leader Harry Reid, D-Nev., would result in savings of just over $2 trillion, some $500 billion less than Reid had promised.

The Senate bill, however, would save more than a House Republican proposal by Speaker John Boehner, R-Ohio. Nonpartisan congressional scorekeepers said his proposal would cut spending less than advertised, about $850 billion over 10 years, not the $1.2 trillion originally promised.

Meanwhile, the Treasury rejected claims from a recent Barclays report that said the debt deadline may not be Aug. 2 but around Aug. 10 instead.

“There’s clearly uncertainty in regards to the debt ceiling and [investors] are waiting for a resolution,” said Zahid Siddique, portfolio manager at Gabelli Equity Trust. “But we think this is a near-term headwind that should pass.”

While there may be further volatility in the market in the next year due to ongoing issues in the euro zone and as Japan recovers from its earthquake in March, Siddique said fundamentals are still on a “positive trajectory” overall and noted that today’s weaker-than-expected durable goods report was an “aberration.”

Gold rose to a new high above $1,625 an ounce, marking the sixth time it's reached record levels in two weeks. Meanwhile, oil prices slipped to session lows after a government report showed that crude inventories unexpectedly jumped for the first time in nine weeks. U.S. light, sweet crude fell below $98 a barrel, while London Brent crude slipped under $118.