The broad indexes advanced despite another day of pessimism over the Fiscal Cliff negotiations in Washington. One day after the Whitehouse said that President Obama would veto a proposal by Speaker of the House John Boehner to avert the fiscal cliff by limiting the increase of federal income tax rates to increase on couples earning $1 million or more per year, if a bill to that effect were passed by the House of Representatives and the Senate, Boehner seemed to draw a line in the sand for Republicans.
Boehner announced during a press conference that his "Plan B" to avert the fiscal cliff would be voted on by the House later on Thursday.
Investors shrugged off the Fiscal Cliff, at least for the day, as the positive flow of economic reports continued. The Bureau of Economic Analysis said that its third reading for third-quarter GDP growth was 3.1%, increasing from its previous estimate of 2.7%. Of course, the fourth-quarter is likely to show a slower GDP growth rate because of Hurricane Sandy.The National Association of Realtors reported that existing-homes sales rose 5.9% to a seasonally adjusted annual rate of 5.04 million in November from a downwardly revised 4.76 million in October. The consensus was for November sales at an annual rate of 4.87 million, according to Briefing.com. November sales were up 14.5% from a year earlier. The KBW Bank Index (I:BKX) was up over 1% to close at 51.90, with al 24 index components showing gains, except for Huntington Bancshares (HBAN), which was down a penny to close at $6.39. Bank of America's shares have now returned 108% year-to-date, following a 58% decline during 2011. Despite the remarkable run this year, the shares are still down 13% since the end of 2010. The shares are still discounted, at 85% of their reported Sept. 30 tangible book value of $13.48, however, the shares appear relatively expensive in the current environment for large-cap bank stocks, at 12 times the consensus 2013 EPS estimate of 96 cents, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $1.25.