Markets use budget talk optimism, Fed stimulus to rebound
By The Associated Press
Published: Tuesday, Dec. 11, 2012, 4:41 p.m.
NEW YORK — The stock market showed signs of life Tuesday on hopeful signs of progress in budget talks being held in Washington.
The Standard & Poor's 500 had its biggest gain this month.
The Dow gained 78.56 points to 13,248.44, after climbing as much as 137 points earlier. The Standard & Poor's 500 index finished up 9.29 points at 1,427.84. Both the Dow and the S&P have risen for five straight days.
The Nasdaq composite ended up 35.34 points at 3,022.30.
Delta Air Lines rose 52 cents, or 5.1 percent, to $10.66 after the company said it will buy almost half of Richard Branson's Virgin Atlantic for $360 million as it seeks a bigger share of the lucrative New York-to-London travel market.
AIG gained $1.90 to $35.26 after the U.S. Treasury Department said it has sold the rest of its stake in the insurer. AIG was bailed out by the government after nearly collapsing during the 2008 financial crisis.
Stocks have edged up since the start of the month as investors watch for developments in the budget talks. Tax increases and federal spending cuts are scheduled to start Jan. 1 unless a deal is reached to reduce the budget deficit. Economists say the measures, if implemented, could eventually push the economy back into recession.
The S&P 500 fell as much as 5 percent after the presidential election Nov. 6 as investors worried that gridlock in Washington would prevent a budget deal.
With Tuesday's advance, the S&P 500 has recouped almost all of the ground it lost since the election when it closed at 1,428.39.
The Wall Street Journal reported that budget negotiations between the White House and Republican House Speaker John Boehner had “progressed steadily” in recent days.
That reinvigorated talks that appeared to have stalled, the paper reported, citing people close to the process.
Stock markets stayed higher even after Boehner said midday Tuesday that President Obama is slow-walking talks to avoid the fiscal cliff, and hasn't outlined spending cuts he's willing to support.
as part of a compromise. Senate Majority Leader Harry Reid said Tuesday afternoon that it would be “extremely difficult” to pass legislation to address the fiscal cliff before Christmas, but added there's still a chance it can be done.
“The market has been very susceptible to ‘fiscal cliff' headlines,” said Todd Salamone, a senior vice president at Schaeffers Investment Research, adding that stocks have rallied more on good news than they have fallen on indications that talks were stalling. “It seems the expectation is that something will get done, but it's a very cautious expectation. There's a lot of money on the sidelines.”
Stocks are holding on to their gains for the year. The Dow Jones is up 8.4 percent since the start of the year, while the S&P 500 has gained 13.5 percent.
The Federal Reserve is expected to announce a new bond-buying plan to support the economy with the goal of further reducing long-term interest rates and encouraging borrowing by companies and individuals.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- More women seize opportunities to start businesses
- Meat prices drain barbecue budgets
- Pandora sued by record companies
- Salad dressing company manages growth
- Low pay, commutes among top stressors
- Lawsuit challenges Hollywood standard of unpaid internships
- Retailers tailor store experience to phones
- Investment in Western Pa. startups reaches 5-year high
- Pa. unemployment rate falls to lowest since 2008; 12,000 more enter workforce
- Squeezed by competition, Chobani to expand offerings
- Record cold facilitates coal’s comeback