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US stocks soar on fiscal-cliff deal

Traders work on the floor of the New York Stock Exchange on January 2, 2013
Traders work on the floor of the New York Stock Exchange on January 2, 2013 in New York City. US stocks shot up Wednesday on news of a fiscal-cliff deal in Congress that prevented most tax increases and delayed sharp spending cuts.

US stocks shot up Wednesday on news of a fiscal-cliff deal in Congress that prevented most tax increases and delayed sharp spending cuts.

A half hour into trade, the Dow Jones Industrial Average was up 263.18 points (2.01 percent) at 13,367.32.

The tech-rich Nasdaq Composite added 80.27 points (2.66 percent) at 3,099.78, while the broad-market S&P 500 gained 30.24 (2.12 percent) at 1,456.43.

In the first trading day of the new year, Wall Street joined a global equities rally celebrating the passage of a bill that avoids the "fiscal cliff" of automatic spending cuts and tax increases.

While markets were closed Tuesday for the New Year holiday, lawmakers approved a compromise bill that raises taxes on the rich and puts off automatic $109 billion federal budget cuts for two months.

If they had failed, Americans would have been hit by sweeping tax hikes, and spending cuts would have kicked in across the government, in a combined $500 billion shock that could have undermined the tepid recovery.

The Wall Street rally reflected a sense of relief that the tax deal should help keep the US economy from slipping back into recession, said Patrick O'Hare of Briefing.com.

"Still, it seemingly ignores the fact that the tax deal, which did not include an extension of the payroll tax cut, is going to be a drag on the economy."

All 30 Dow members were in positive territory. Alcoa was up 2.5 percent, Caterpillar surged 4.5 percent and Bank of America added 3.5 percent.

Auto-sharing service Zipcar roared 48.1 percent higher after car-rental giant Avis announcing plans to buy it in a deal valued at $500 million. Avis rose 6.0 percent.

Boeing rose 2.5 percent after announcing an order from leasing company Aviation Capital Group for 60 of its new 737 MAX jetliners, a deal worth $6 billion at current list prices.

Nasdaq heavyweight Apple was up 3.1 percent.

Treasury bonds were hammered. The 10-year yield rose to 1.83 percent from 1.76 percent Monday, while the 30-year jumped to 3.03 percent from 2.95 percent. Bond prices and yields move inversely.

On Monday, news that Congress was close to a fiscal-cliff deal sparked a sharp rally: The Dow gained 1.3 percent, the S&P 500 added 1.7 percent and the Nasdaq surged 2.0 percent.

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