The market started lower Friday but spiked higher shortly before midday as the top members of the House and Senate spoke at the White House following a closed-door session with Obama. House Speaker John Boehner and Senate Minority Leader Mitch McConnell both said they offered higher tax revenue as part of a deal. Boehner said he outlined a framework that is consistent with Obama's call for a "balanced" approach of both higher revenue and spending cuts.
"It's a good start ... the fact that they were all standing together," said Ben Schwartz, the chief market strategist at Lightspeed Financial, a New York-based broker.
The Dow Jones industrial average was down 4 points at 12,537 as of 2:31 p.m. in New York, after falling as much as 71 points at mid-morning. The S&P was little changed at 1,352 and the Nasdaq rose 1 point to 2,838.
Investor concern that Obama and Congress won't reach a deal on how to cut the budget deficit has caused a sell-off in stocks since Election Day. The Dow is down 5 percent since Nov. 6. If an agreement isn't made, automatic government spending cuts and tax increases are set to kick in at the beginning of next year. The measures total about $700 billion for 2013 and could send the country back into recession.
The Dow is still lower for the week and is on track to record its fourth straight weekly decline. That slump has pared the index's gains for the year to 2.5 percent. The S&P 500 is also heading for a weekly decline, and is on track to have fallen three of the last four weeks.
Mixed reports as the third quarter earnings season draws to a close have also weighed on stocks.
Dell fell 62 cents to $8.95. The computer maker is struggling as consumers switch to tablets and smartphones away from PCs. Dell said that its revenue may fall as much as 13 percent in the fourth quarter.
Superstorm Sandy depressed U.S. industrial output in October, while production of machinery and equipment declined sharply, reflecting a more cautious outlook among businesses, according to a Federal Reserve report.
The Fed says industrial output fell 0.4 percent last month, after a 0.2 percent gain in September. Excluding the storm's impact, production at the nation's factories, mines and utilities would have been up about 0.6 percent.
Among stocks making big moves:
—Schiff Nutrition International Inc., a nutritional supplement company, jumped $9.83 to $43.75 after U.K.-based Reckitt Benckiser Group offered to pay $42 a share in cash to buy the company.
— Ruckus Wireless Inc., a maker of wireless networking equipment, dropped $1.27 to $13.73 on its first day of trading. That's a decline of 8 percent.
— Sears fell $11.60 to $46.79 after the company said sales at both its Kmart and Sears stores continued to tumble.
—Foot Locker rose $1.30 to $33.15. Its net income rose 61 percent in the third quarter.