Cue Tom Petty and Heartbreakers' "Free Falling," because the broad-based S&P 500 (SNPINDEX:^GSPC) is in submarine mode, diving every chance it gets whenever the ramifications come to light of a fiscal cliff deal that doesn't get done in Congress.

Today, President Obama remarked that he's unwilling to add the burden of extra taxes on the middle class, because that additional taxation on middle-class earners could lead us back into another recession. Breaking out the "R" word (recession) when both sides are still so far apart didn't sit well with investors. On the day, the S&P 500 ended lower by 19.04 points (-1.39%) to 1,355.49.

With fourth-quarter earnings now predominantly out of the way, individual stories are helping drive the companies within the S&P 500.

Advanced Micro Devices (NASDAQ:AMD) continued to trudge lower, putting up a loss of 8% on the day, after noting that there aren't any immediate plans to pursue a sale of the business. AMD, instead, plans to use its innovation, and a 15% reduction in personnel, to reduce costs, improve operating efficiency, and create long-term value for shareholders. The question left is: Will there be enough cash left in the tank to support AMD's turnaround campaign?

Homebuilders took it on the chin again, with PulteGroup (NYSE:PHM) leading the group lower by 6%. The impetus here is also the fiscal cliff. With multiple tax reforms currently on the table, it's possible that the amount of mortgage interest income that homeowners can claim as a reduction on their income may fall -- especially for those with high levels of income. Ultimately, that could put the kibosh on homebuying activity in the near term.

On the plus sidem teen retailer Abercrombie & Fitch (NYSE:ANF) absolutely crushed Wall Street's estimates by posting a 41% rise in profits and an 8% boost in revenue for the third quarter. Although it's still having trouble internationally, Abercrombie is finding that its efforts to revamp its product line appear to be working. Before you get too excited, though, keep in mind that same-store sales still fell 3% as consumer budgets remain constrained. Still, shares spiked 34.5%!

Finally, Dow Jones component and networking giant Cisco Systems (NASDAQ:CSCO) confirmed that all systems are go when it blasted by analysts' first-quarter earnings expectations. For the quarter, Cisco reported an 18% increase in net income as revenue rose a modest 5.5% -- not bad, given the struggles in Europe. More important, Cisco noted improvement in U.S. demand, which is a key driver of its bottom-line profits. With a lot of cash in the bank and an ongoing restructuring, Cisco is looking leaner and meaner than ever.

Can the turnaround continue?
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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