Even though this trading week was short because of the Christmas holiday, and volume was extremely light when the markets were open, they still managed to close dramatically down. The Dow Jones Industrial Average (^DJI -0.98%) posted a weekly loss of 1.91%, while the S&P 500 (^GSPC -0.46%) slid lower by 1.93%, or 27 points, and the Nasdaq (^IXIC -0.64%) performed the best, as it lost only 1.77% during the last full week of 2012. The Dow's 30 components ended the week miserably, as 28 of them traded lower for the week.

The main driver pushing markets lower was the fiscal cliff. As politicians argue over who will be taxed and who won't, investors are preparing themselves for the fall and reducing their risk. It's widely believed that if we fall off the fiscal cliff, our economy will almost instantly tumble into a recession and it's likely that all the major indexes will quickly sell off. Those who sell shares now would avoid the losses if the markets were to fall, but they'll also miss the rally if Washington agrees to a compromise and we avoid falling over. As usual, long-term investors should sit tight and try to enjoy the ride, whichever direction it takes us.

But before I get to the Dow losers this week, let's look at the big winner. For the third time this month, Bank of America (BAC -1.07%) was the best performing Dow stock. Not only was it the best-performing stock this week, but it's also the best-performing Dow component for the year, up 104% year to date. This week, shares ended higher by 0.79%, while fellow Dow banking stock JPMorgan Chase (JPM 0.15%) fell by 1.09%. The only other Dow winner this week was Du Pont (DD), which ended the trading day on Friday higher than where it started on Monday by one penny, or 0.02%.

Now to this week's losers
The biggest loser this week was again Hewlett-Packard (HPQ 0.11%). Shares of the once-dominant PC company fell by 4.26% during the four trading days and is now down 46.89% year to date. The big driver this week for HP was the announcement that the Justice Department is investigating the company's Autonomy unit. Hewlett-Packard recently took an $8.8 billion writedown on the software unit after paying $10 billion for the British company in 2011. HP told shareholders when the writedown appeared on the financial statements that $5 billion of it was due to some accounting errors discovered on Autonomy's books that predated the acquisition.  

Although the other big Dow technology companies didn't fall quite as hard as Hewlett-Packard did this week, some of them still managed to post 2%-plus declines. Shares of Cisco (CSCO -0.52%) dropped by 2.11%, while Intel (INTC 1.77%) fell by 2.03% and Microsoft (MSFT -2.45%) lost 2.38%. Hands down, the technology industry was the worst-performing Dow sector this week. Even IBM (IBM -8.25%) managed to lose 1.66% of its value in just the four trading sessions.

Big Oil also took a hit this week, after it was announced that Lisa Jackson, the Environmental Protection Agency's top dog, is resigning. The fear around the energy industry is that the new EPA leader may crack down on the controversial "fracking" form of drilling for oil and gas in shale rock around the United States. Shares of ExxonMobil (XOM 0.23%) were down 2.32%, while Chevron (CVX 1.04%) saw its stock drop 2.6% this week.  

After shares of Merck (MRK 2.93%) fell by 4.83% last week, they continued their decline by dropping another 1.9% this week. The possible reduction to Medicare outlays has hurt not only the health-insurance companies, but also the drug manufacturers, as some believe the government will want to negotiate cheaper drug prices as a way to reduce the cost of government-run health programs. Both Pfizer (PFE -3.85%) and UnitedHealth Group (UNH 1.35%) saw their shares drop by 0.47% and 1.71%, respectively.

The other industry ravaged this week was defense and aerospace. Shares of Boeing (BA 1.51%) and United Technologies (RTX 0.68%) were hammered as it appeared more likely that we'll fall off the fiscal cliff. If that happens, not only will taxes increase for all Americans no how much money they make, but automatic spending cuts will also go into effect -- and the defense industry will be one of the affected areas. Boeing fell by 1.58%, while United Technologies saw its shares cut down by 2.15%.

The other noteworthy Dow losers this week were McDonald's (MCD -0.42%), which lost 2.24%; Procter & Gamble (PG -0.03%), 2.21%; Coca-Cola (KO 0.31%), 2.04%; American Express (AXP -0.84%), 1.52%; and Travelers (TRV 0.26%), 1.88%.