Joseph N. DiStefano
Philadelphia Inquirer

Just because President Barack Obama and Congress haven’t cut a deal to avoid tax increases and spending cuts that will threaten a new recession, is that any reason for investors to freak out and sell stocks, bonds and retirement funds?

Investment advisers, trying to preserve healthy 2012 gains in the markets after a decade of pathetic results, are pushing clients to stay calm about the mess in Washington.

While the financial markets will be nervous until there is a deal, “the underlying economic data continues to offer encouraging signs,” Mark Luschini, chief investment strategist at Janney Montgomery Scott, wrote in a note to clients Wednesday.

“[Though] investors are being bombarded with suggestions to sell, Vanguard urges you to be cautious,” said investment analyst Sarah Hammer, in one of a string of video and written commentaries the fund giant has posted to convince clients to hold onto their retirement accounts instead of dumping them to buy, say, gold, or high-yield, high-risk junk debt.

Obama was scheduled to return to Washington on Wednesday night from a Christmas vacation in Hawaii. The Senate is to reconvene today. If the president and the Senate and House fail to reach an agreement, hundreds of billions of dollars of tax increases and federal spending cuts could jolt the U.S. economy.

The overhang of the fiscal cliff deadline did not overwhelm the markets on Wednesday. The Dow Jones industrial average slipped 0.2 percent.

There is a chance for an abridged deal before Jan. 1 that would allow some higher taxes for wealthier Americans and fewer budgets cuts. Or an agreement might be achieved in the first weeks or months of 2013. But many observers believe either of those developments would still unnerve the financial markets and affect the economy at a time when housing and other economic indicators give some confidence that the new year could see a fast-improving economy.

Some of the consequences of tumbling over the cliff would be immediate, such as an end to some unemployment benefits. Others, such as huge cuts in government spending, would have a cumulative effect that would spread over 2013, analysts said.

Congressional officials said Wednesday they knew of no significant strides toward a compromise over a long Christmas weekend, and no negotiations have been set.

After conferring on a conference call, House Republican leaders said they remain ready for talks, urged the Senate to consider a House-passed bill that extends existing tax cuts, but gave no hint they intend to call lawmakers into session unless the Senate first passes legislation.

A short while later Senate Majority Leader Harry Reid, D-Nev. countered that the House leadership should allow action on a Senate-passed bill that lets income tax rates rise only on incomes above $200,000 for individuals and $250,000 for couples. The measure could “pass tomorrow” if put to a vote, he said.

The Associated Press contributed to this report.