Shares on Wall Street rose modestly on Tuesday as investors speculated that negotiations between Democrats and Republicans would lead to a budget deal.
The market’s gains followed a steep rally in the previous session, which lifted the Standard Poor’s 500-stock index to its highest level in nearly two months.
Speaker John A. Boehner said he hoped for a broader deal on the budget talks and was still talking with President Obama about the issue.
President Obama made a counteroffer to Republicans on Monday that included a major change in position on tax increases for the wealthy. The plan would increase tax rates on households making more than $400,000 a year, instead of the $250,000 level that he had long pushed.
Investors have been reluctant to make big bets in the face of uncertainty over the standoff in Washington. If no deal is reached among the president and lawmakers, a combination of steep tax increases and spending cuts are set to take effect next year that could hurt the country’s economy.
“Neither side appears to be digging in their heels so much, and that increases the optimism there might be a deal,” said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, N.Y. “Political risks have been the main thing suppressing market gains, so if those abate, we could see a rally that is significant.”
In morning trading, the Standard Poor’s 500-stock index rose 0.5 percent. The Dow Jones industrial average rose 0.3 percent, and the Nasdaq composite was up 0.7 percent percent.
“We’ve been getting a series of snippets suggesting accommodation from both Boehner and Obama, which is feeding the sense in markets that we could get a deal,” said Michael Holland, chairman of Holland Company in New York.
European shares rose 0.3 percent on Monday, while January crude oil futures were up 0.6 percent.
Arbitron, the media and marketing research company, surged about 24 percent after Nielsen Holdings agreed to buy it in a deal worth $1.26 billion. Nielsen rose more than 1 percent.
Oracle reports results after the market closes. The company is expected to report profit growth of more than 10 percent, but with a 2.3 percent dip in revenue, according to Thomson Reuters data.
Article source: http://www.nytimes.com/2012/12/19/business/daily-stock-market-activity.html?partner=rss&emc=rss
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