NEW YORK (
TheStreet) -- Major U.S. equity averages heated up Monday as investors cheered signs that Washington officials were making noteworthy progress in their efforts to try to avert the so-called fiscal cliff.
Republican House Speaker John Boehner seems to be in the process of yielding to some of President Barack Obama's main demands, including higher tax rates for wealthy Americans, as both sides work to avoid falling over the cliff's $600 billion in automatic tax hikes and spending cuts at the end of the year. Boehner has suggested an increase in taxes on Americans with incomes exceeding $1 million.
Dow Jones Industrial Average rose 100 points, or 0.76%, to 13,235. The blue-chip index began the session up 7.8% this year.
Winners outnumbered losers 26 to three. The biggest percentage blue-chip gainers were
Bank of America
shares finished up 0.65% as the retail giant lowered prices on Apple products for the holiday season.
shares also edged higher, up 1.3%, as the networking giant hired
to find a buyer for router business Linksys,
reported, citing people with knowledge of the situation. Linksys is likely to fetch less than the $500 million Cisco paid for it in 2003 because it is a mature consumer business with narrow margins, the people told
Laggards in the Dow included
tacked on 17 points, or 1.2%, to 1,430. The
added 39 points, or 1.3%, to 3,011.
Most sectors in the broad market were in positive territory, led higher by financials, consumer cyclicals, utilities and capital goods.
Volumes reached 3.42 billion shares on the
New York Stock Exchange
and 1.90 billion shares on the Nasdaq. Advancers outpaced decliners 2-to-1 on the Big Board and 2.2-to-1 on the Nasdaq.
"We persist in projecting a successful avoidance of the fiscal cliff," said John Stoltzfus, chief market strategist at Oppenheimer and Co. That's because it's mostly in everyone's interest "to avert an unwelcome ride that could send a domestic and global economic recovery process into recession."
Michala Marcussen, global head of economics at Societe Generale, said it's apparent that a lot of work still needs to be done to resolve the U.S. budget.
While Boehner's tax proposal is a positive development, it's still a much higher level of income than the $250,000 proposed by the Obama camp and would leave a "gaping" hole in reaching Obama's $1.4 trillion revenue target, Marcussen said.
Therefore, "the divide between the two camps still remains significant," she said.
Craig Johnson, senior technical research analyst at Piper Jaffray, said the resolution of the U.S. budget talks could result in a retest of the key overhead resistance at 1,550 on the S&P 500.
On Monday, the New York Federal Reserve's Empire State manufacturing survey showed a worse-than-expected read on the general business conditions index of negative 8.1 for December, down from negative 5.2 the prior month. Economists, on average, were expecting an improvement to negative 1 in December.
"The surprise fall in the U.S. Empire State manufacturing index in December ... casts doubt on hopes that industry is benefiting from the improvement in global demand," said Paul Dales, senior U.S. economist at Capital Economics.
Gold for February delivery added $1.20 to settle at $1,698.20 an ounce at the Comex division of the New York Mercantile Exchange, while January crude oil contracts were up 47 cents to close at $87.20 a barrel.
The benchmark 10-year Treasury plummeted 20/32 to raise the yield to 1.775%. The dollar was rising 0.01%, according to the
U.S. dollar index
In corporate news,
(AAPL - Get Report)
shares were downgraded to "neutral" from "buy" and the price target cut to $575 from $675 by Citigroup analyst Glen Yeung, as near-term supply chain order reductions raised questions about the strength of the iPhone5.
Apple said sales of the iPhone 5 in China exceeded more than 2 million since it launched the device there on Friday. The shares climbed 1.8%.
reached a deal Monday to buy the shares of
that it doesn't already own for $2.97 a share, higher than the offer Sprint made last week of $2.90 a share. Shares of Clearwire plunged 14%; Sprint shares increased 0.18%.
announced it's reviewing the possible sale or disposition of one or more corporate assets, or the sale of the entire company. Shares were up 3.1%.
said Monday it named mathematician co-founder and chief scientist Tom Leighton as its new CEO, effective Jan. 1. He will succeed Paul Sagan, who announced earlier this year that he intended to step down as chief executive by the end of 2013. Shares were up 1.3%.
American International Group
said Monday it plans to sell its stake in Asian life insurer
. AIG's 13.7% stake in AIA Group is worth about $6.7 billion. AIG shares ticked up 3%.
could emerge largely unscathed from a two-year investigation by the Federal Trade Commission of its Web-search business, people familiar with the matter told the
. The FTC could agree to end its probe as soon as this week, in response to several voluntary changes that Google will agree to make to its search practices, said one person briefed on the matter. Shares were up 2.7%.
shares surged 12.8% after Elliott Management Corp., whose affiliates have an 8% interest in the firm's common stock, is offering to buy the company for $11 a share in cash, or $2.3 billion.
Sun Life Financial
(SLF - Get Report)
shares shed 3.6% after the company said it will sell its U.S. annuity business for $1.35 billion to Delaware Life Holdings.
-- Written by Andrea Tse and Joe Deaux in New York.
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