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'Cliff' Deal Sends Stocks Up, But Problems Lurk

The political bickering that's almost certain to persist could have another unwelcome effect: influencing ratings agencies to cut the U.S. government's credit score. That happened before, when Standard & Poor's cut its rating on U.S. government debt in August 2011, and the stock market plunged.

Even so, Wednesday's performance gave no hint of the dark clouds on the horizon.

The Dow enjoyed big gains throughout the day, up by more than 200 points within minutes of the opening bell. It swelled even bigger in the final half hour of trading, and closed up 2.4 percent to 13,412.55.

The Standard & Poor's 500 jumped 36.23, or 2.5 percent, to 1,462.42. The Nasdaq rose 92.75, or 3.1 percent, to 3,112.26.

The yield on the 10-year Treasury note rose sharply, to 1.84 percent from 1.75 percent. Prices for oil and key metals were up. The price of copper, which can be a gauge of how investors feel about manufacturing, rose 2.3 percent. The Dow Jones transportation index rose to its highest point since July 2011.

The gains persisted despite small reminders that there are still serious problems punctuating the world economy, like middling growth in the U.S. and the still-unsolved European debt crisis. The government reported that U.S. builders spent less on construction projects in November, the first decline in eight months. And the president of debt-wracked Cyprus said he'd refuse to sell government-owned companies, a provision that the country's bailout deal says it must at least consider.

Among stocks making big moves, Zipcar shot up 48 percent, rising $3.94 to $12.18, after the company said it would sell itself to Avis. Avis rose 5 percent, up 95 cents to $20.77.

Marriott rose 4 percent, up $1.52 to $38.79, after SunTrust analysts upgraded the stock to "buy." Headphone maker Skullcandy dropped 13 percent, losing 99 cents to $6.80, after Jefferies analysts downgraded it to "underperform."

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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