Optimism about "cliff" boost market; financials lead
By Caroline Valetkevitch | December 18, 2012 8:42 AM EST
The S&P 500 ended at its highest level in almost two months 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 and other growth-oriented sectors. The S&P Financial Index <.GSPF> gained 2.1 percent, while the S&P consumer discretionary sector <.GSPD> was up 1.8 percent.
Investors worry the U.S. economy could slide into recession if the tax and spending changes are implemented.
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," 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."
The Dow Jones industrial average <.DJI> was up 100.38 points, or 0.76 percent, at 13,235.39. The Standard & Poor's 500 Index <.SPX> was up 16.78 points, or 1.19 percent, at 1,430.36, its highest close since October 22. The Nasdaq Composite Index <.IXIC> was up 39.27 points, or 1.32 percent, at 3,010.60.
The gains, which came on lighter-than-usual volume, ended a two-day losing streak on the S&P 500. The index also had its best daily percentage gain since November 23. Volume was roughly 6.2 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of 6.4 billion.
In the financial sector, shares of Bank of America
"People are looking for sectors to play, and I think Bank of America broke out of some long-standing price levels, and it got everything going in that sector," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.
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)