Confidence about "cliff," financials boost Wall Street
By Gabriel Debenedetti | December 18, 2012 5:07 AM EST
Stocks rose on Monday on signs of positive developments in weekend negotiations over the "fiscal cliff," though trading volumes were light.
Each of the S&P 500's 10 sectors was higher, led by financials, as the S&P Financial Index <.GSPF> gained 1.6 percent. Shares of Bank of America
Republican House Speaker John Boehner edged closer to President Barack Obama's position as they try to avoid the automatic tax hikes and spending cuts that would take place in the new year if no deal is reached.
Sources familiar with talks confirmed that Boehner proposed extending lower tax rates for everyone who earns less than $1 million. Still, this position remains far from that of President Obama.
The news was enough to boost the market, which has steadily risen over the last month even though there are few signs that legislators are close to a deal.
"I think there's a lot of expectation that a fiscal cliff deal of some sort does get done," said Joseph Benanti, managing director of Rosenblatt Securities in New York.
"People are going to stay slightly positive, not overly enthusiastic, going into the end of the year."
Trading tends to be lighter at the end of the year and investors have been cautious due to the uncertainty in Washington. Investors worry the U.S. economy could slide into recession if the tax and spending changes are implemented.
The Dow Jones industrial average <.DJI> was up 84.99 points, or 0.65 percent, at 13,220.00. The Standard & Poor's 500 Index <.SPX> rose 12.81 points, or 0.91 percent, at 1,426.39. The Nasdaq Composite Index <.IXIC> gained 28.90 points, or 0.97 percent, at 3,000.24.
The Nasdaq briefly hit a 1 percent gain before noon.
If the S&P 500 ends higher, it would end a two-day losing streak that came after a six-day run of gains. Despite the uncertainty, the S&P has performed well in the last month, grinding higher in mostly light volume.
The tech giant said it sold more than 2 million of its new iPhone 5 smartphones in China during the three days after its launch there on Friday, but the figures did not ease worries about stiffer competition. Apple shares have tumbled more than 25 percent in about three months.
(Editing by Kenneth Barry and Nick Zieminski)
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