Market Recap: Stocks Tank on 'Fiscal Cliff' Worries & President's Press Conference

Markets closed down today:

▼ Dow: -1.45 percent

▼ Nasdaq: -1.29 percent

▼ S&P: -1.39 percent

Precious metals:

▲ Gold: +0.02 percent to $1,723.08 an ounce

▲ Silver: +0.76 percent to settle at $32.54

Commodities:

▲ Oil: +1.15 percent

Markets were down because:

Investors drew little hope Wednesday for a quick compromise in U.S. budget talks after President Barack Obama insisted that higher taxes on wealthy Americans would have to be part of any deal.

Stocks fell sharply, and even a signal from the Federal Reserve that it could launch a program in December to speed job growth failed to encourage investors. The Dow Jones industrial average dropped 185 points.

Obama made clear he would seek higher tax revenue from the wealthiest Americans, which faces opposition among some Republicans in Congress. Obama said that a modest increase on the wealthy "is not going to break their backs."

The "cliff" is a package of tax increases and government spending cuts that will take effect Jan. 1 unless Obama and Congress reach a deal first. They would total about $700 billion for 2013 and could send the country back into recession.

Stocks have fallen steadily since voters returned Obama and a divided Congress to power Nov. 6. The Dow has fallen 675 points, or 5.1 percent, including three daily drops of more than 100 points.

The Standard & Poor's 500 index has dropped 5 percent in that time, returning to where it stood in late July.

Obama said Wednesday that he would not to cave to Republicans who have pressed for tax cuts first passed by President George W. Bush to be extended for all income earners.

Obama has long opposed extending the cuts for families making more than $250,000 a year, but he gave in to GOP demands in 2010, when the cuts were up for renewal. They were extended two years.

The president also met with business leaders Wednesday to discuss the economy.

Obama is to meet Friday with Republican House Speaker John Boehner and the top Republican in the Senate, Mitch McConnell. They are expected to designate aides to begin the search for a compromise on the budget.

Boehner and McConnell have said they won't agree to raise tax rates for the wealthy. They have said they are willing to support raising overall tax revenue as part of a deal that also makes changes to the government's largest benefit programs.

There are ways to increase tax revenue from the wealthy without raising rates, including limiting tax deductions, but the path to compromise is unclear. Obama sidestepped a question about insisting on higher rates for the wealthy.

On Wednesday, the Dow dropped 185.23 points, or 1.5 percent, to 12,570.95. The S&P fell 19.04 points, or 1.4 percent, to 1,355.49, and the Nasdaq composite declined 37.08 points, or 1.29 percent, to 2,846.81.

Indexes are still up on the year, though they have pared gains since reaching four-year highs. The S&P has fallen 7.5 percent since its Sept. 14 peak, and the Dow has fallen 7.6 percent, more than 1,000 points, since its Oct. 5 peak.

The Commerce Department said that Americans cut back on spending in October, suggesting that many are still cautious about the economy.

Sales dropped 0.3 percent last month after three months of gains. That was worse than analysts had been expecting, according to FactSet, a provider of financial data.

The Federal Reserve released minutes of its October meeting and suggested that it may replace a soon-to-end program of buying U.S. government bonds to lower long-term interest rates and spur job growth.

Under an existing program, known as Operation Twist, the Fed has been selling $45 billion a month in short-term Treasurys and using the proceeds to buy an equal amount of longer-term securities.

The Fed minutes showed support among "a number of" Fed policymakers to replace Twist with another program of long-term bond purchases when it ends in December.

The Associated Press contributed to this report.