Wall Street closes sharply lower

Bipartisan budget proposal boosts fears of imminent Fed taper.

United States stocks closed sharply lower after congressional politicians announced a bipartisan budget deal that could avert another US government shutdown.

Analysts also attributed the fall to profit-taking after the equity market surge of 2013.

At the closing bell, the Dow Jones Industrial Average slipped 129.6 points, or 0.81%, to 15,843.53.

The broad-based S&P 500 slipped 20.40 points, or 1.13%, to 1,782.22, while the tech-rich Nasdaq Composite Index gave up 56.68 points, or 1.4%, to 4,003.81.

Investors worry that the deal, which is considered likely to clear the House and the Senate, removes a key obstacle to the US Federal Reserve reducing economic stimulus. With the political risk reduced, analysts contend, the Fed is more likely to 'taper' sooner rather than later.

The action came after Democratic Senator Patty Murray and House of Representatives Republican Paul Ryan late on Tuesday announced a federal budget deal for the next two years that would avert another government shutdown when US spending authority expires on January 15.

"The market has been in a little bit of a sell-off mood since the beginning of the month, and rightly so after being up 25%," Mace Blicksilver, director of Marblehead Asset Management said, referring to the S&P 500's gain so far in 2013.

"It's getting close to the end of the year," Michael James, managing director of equity trading at Wedbush Securities, said. "There's more profit to protect this year."

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