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By John Nyaradi

Fiscal cliff headlines continue whipsawing U.S. stocks and ETFs, and now the standoff appears to be going down to the wire.

As the high stakes game of chicken continues between the White House and Congress, a late Sunday night session of Congress has been scheduled to resolve, or not, the fiscal cliff debate.

Stocks and ETFs gyrated wildly today as fiscal cliff developments unfolded.

President Obama flew back from Hawaii, cutting his vacation short, while Senate Majority Leader Harry Reid said it looked like the United States would be going over the cliff. Late in the trading day, an announcement of a Sunday evening session of Congress boosted stocks into the close, erasing most losses to finish with just small declines for the day.

During the day, the Dow Jones Industrial Average (DIA) slipped below the psychologically important 13,000 level, but managed to close the session at 13, 096, down 0.14%.

The S&P 500 (SPY) closed down 0.12%, the Nasdaq Composite (QQQ) declined 0.16%, and the Russell 2000 Index (IWM) slipped 0.18%.

In other major markets, gold (GLD) gained 0.23% to close at $663/oz. and oil (USO) fell 0.25% to close at $90.87/bbl.

Treasury Secretary Timothy Geithner has until Monday to start using “extraordinary measures” to prevent a U.S. default on its debt when the authorized debt ceiling is reached by the end of December. Volume remained weak as investors wait for some kind of clarity on the fiscal cliff issue, and jittery nerves were clearly evident as both positive and negative headlines flowed. VIX, the CBOE S&P 500 Volatility Index, also known as the “fear index,” spiked higher, hitting a high of 20.90 intraday before falling back to close at 19.47 with a small loss and close to the bottom of its trading range. VIX continues trading above and below 20 as anxiety grows, and today’s action took the index to levels not seen since last summer as volatility and fear reenter the marketplace.

Today was the fourth straight day of declines for major U.S. indexes as the fiscal cliff uncertainty dampens optimism. In economic reports, consumer confidence for December declined to 65.1, down sharply from November’s 71.5 and missing expectations. Good news came from new home sales, which rose, and weekly jobless claims, which declined.

Tomorrow brings economic reports that include the Chicago PMI and pending home sales reports.

Bottom line: The fiscal cliff debate appears set to go down to the final deadline with a dramatic session of Congress scheduled for Sunday evening at 6:30 pm Eastern time. Coming just one day before the end of the year, this overtime session will set the tone for what happens in early January. The new Congress takes office on January 3rd and House Speaker Boehner will stand for reelection that day as well. So the high drama and volatility will continue as the fiscal cliff clock continues to tick.

Disclosure: Wall Street Sector Selector actively trades a wide range of exchange traded funds and positions can change at any time.

Source: Fiscal Cliff Going Down To The Wire