Optimism about "cliff," financial shares lift market
December 18, 2012 7:35 AM EST
U.S. stocks climbed on Monday on rising hopes that negotiations over the "fiscal cliff" were making progress and that a deal could be reached in days.
After weeks of stalemate, President Barack Obama and Republican House Speaker John Boehner met at the White House on Monday, raising hopes that Washington will be able to head off steep tax hikes and spending cuts that threaten the economy.
All of the S&P 500's 10 sectors were higher, led by financials. The S&P Financial Index <.GSPF> gained 1.5 percent, and shares of Bank of America
Boehner has edged closer to Obama's position by proposing to extend lower tax rates for everyone who earns less than $1 million. Still, his position remains far from that of President Obama.
"Trumping everything right now are the fiscal cliff talks. It seems like progress is being made. I think it's getting to the nitty gritty, and I think that's what the market is reacting to," said Alan Lancz, president of Alan B. Lancz & Associates Inc. in Toledo, Ohio.
"The bet right now is that something will come by the end of this week."
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 54.81 points, or 0.42 percent, at 13,189.82. The Standard & Poor's 500 Index <.SPX> was up 10.19 points, or 0.72 percent, at 1,423.77. The Nasdaq Composite Index <.IXIC> was up 22.44 points, or 0.76 percent, at 2,993.78.
Both the S&P 500 and Nasdaq briefly rose more than 1 percent earlier in the session.
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.
Advancing stocks included the homebuilding sector <.DJUSHB>, which rose 3.7 percent.
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.
(Reporting by Gabriel Debenedetti and Caroline Valetkevitch; Editing by Kenneth Barry and Nick Zieminski)