NEW YORK (AP) â¿¿ Optimism that President Barack Obama and Congressional leaders will reach a deal on the budget deficit and avoid the "fiscal cliff" helped stocks notch their first advance in four days.
The market started lower Friday but spiked higher shortly before midday as the top members of the House and Senate spoke at the White House following a closed-door session with Obama. House Speaker John Boehner and Senate Minority Leader Mitch McConnell both said they offered higher tax revenue as part of a deal. Boehner said he outlined a framework that is consistent with Obama's call for a "balanced" approach of both higher revenue and spending cuts.
"It's a good start ... the fact that they were all standing together," said Ben Schwartz, the chief market strategist at Lightspeed Financial, a New York-based broker.The Dow Jones industrial average closed up 45.93 points, or 0.4 percent, at 12,588.31, after falling as much as 71 points at mid-morning. The Standard & Poor's 500 index rose 6.55 points, or 0.5 percent, to 1,359.88 and the Nasdaq rose 16.19 points, or 0.6 percent to 2,853.13. Investor concern that Obama and Congress won't reach a deal on how to cut the deficit has caused a sell-off in stocks since Election Day. Stocks fell Wednesday after Obama insisted that higher taxes on wealthy Americans would have to be part of any deal and that he would not cave to Republicans who have pressed for tax cuts first passed by President George W. Bush to be extended for all income earners. The Dow is down 5 percent since Nov. 6. If an agreement isn't made, automatic government spending cuts and tax increases are set to kick in at the beginning of next year. The measures total about $700 billion for 2013 and could send the country back into recession.