Stocks rose on Wall Street on Monday as investors were encouraged by signs of progress in budget talks in Washington two weeks before tax increases and government spending cuts will take effect if no deal is reached.
The Dow Jones industrial average rose 100.38 points to 13,235.39, its biggest gain this month. The Standard Poor’s 500-stock index climbed 16.78 points to 1,430.36 and the Nasdaq composite index rose 39.27 points to 3,010.60.
Marc Chaikin, chief executive of Chaikin Analytics, a market research firm based in Philadelphia, said investors had become more optimistic about a resolution in the budget talks after the House speaker, John A. Boehner, made an offer to increase tax rates on high-income Americans.
“The fiscal cliff is obviously foremost on everyone’s mind,” Mr. Chaikin said.
Banks were among the best-performing stocks. Citigroup gained $1.55, 4.1 percent, to $39.15 after Raymond James, the brokerage house, raised its target price on the stock to $52 from $44. In a note to clients, it reaffirmed its strong buy rating, citing the “improving fundamental outlook.” Bank of America was also higher, gaining 42 cents, or 4 percent, to $11.
Investors now prefer financial stocks to technology stocks, said Ben Schwarz, chief market strategist at Lightspeed Financial.
“The banks are ripping today,” Mr. Schwarz said. “People are looking for stability, and the tech sector hasn’t given them any.”
Financial companies are the best performing industry group in the S. P. 500 this year, according to FactSet Data. The group, which includes banks like Wells Fargo and insurers like Travelers, has gained 25 percent this year.
Apple rose $9.04, or 1.8 percent, to $518.83 after it said it sold more than two million iPhone 5 units in China in their first three days of availability, setting a record for that market. Apple stock has fallen 26 percent since closing at a record $702.10 in September and is trading close to its lowest since February.
In Washington, there appeared to be movement in long-stalled budget talks aimed at avoiding tax increases and government spending cuts set to take effect Jan. 1. The combination could lead to a recession.
Indexes opened higher after the news that Mr. Boehner, a Republican, had offered $1 trillion in higher tax revenue over 10 years and an increase on the top tax rate for people making $1 million a year, to 39.6 percent from 35 percent. The market moved higher still after reports shortly before noon that Mr. Boehner had gone to the White House to meet with President Obama.
Wall Street has been relatively calm in recent weeks, but David Kelly, chief global strategist for J.P. Morgan Funds, said that by Friday the market will be “squarely focused on what is or is not happening in Washington.”
He suggested in a note to clients that the markets will not have “priced in” any outcome, “setting the stage for a market rally with an agreement and a slump with stalemate.”
Clearwire, an Internet access company, slid 46 cents, to $2.91, after Sprint announced terms of its buyout deal for the company. Sprint’s price of $2.97 a share was below Clearwire’s closing stock price Friday.
Japanese stocks rose after the country’s Liberal Democratic Party regained power in a landslide election victory.
Brian Singer, a partner at William Blair, an asset management firm based in Chicago, said investors had been encouraged by the outcome, which gave the conservative party overwhelming control of Parliament. The Liberal Democrats have promised greater economic stimulus spending and more action to end a destructive cycle of declining prices.
Interest rates were higher. The Treasury’s benchmark 10-year note fell 20/32, to 98 21/32, and the yield rose to 1.77 percent from 1.70 percent late Friday.
The American International Group, the insurance company, rose $1.01, or 3 percent, to $34.95, after it said it was selling its remaining stake in the AIA Group, a life insurer.
Tenet Healthcare gained 55 cents, or 1.8 percent, to $31.18 after Deutsche Bank raised its recommendation on the stock to buy from hold. The bank cited Tenet’s “compelling” business and financial outlook over 12 to 24 months.
Article source: http://www.nytimes.com/2012/12/18/business/daily-stock-market-activity.html?partner=rss&emc=rss