December 4, 2021

Shares Lean Higher in Early Trading

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.

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Deal for Skype Lifts Wall Street

Companies have built up a record amount of cash since the recession, and they have begun to use it for acquisitions, dividends and stock buybacks. Technology companies have particularly big cash hoards; Microsoft had $50 billion in cash and short-term investments at the end of March.. The purchase of Skype is Microsoft’s largest deal in its history.

Large companies also want to put their cash stockpiles to work because they’re getting minimal returns on them, said Oliver Pursche, president of Gary Goldberg Financial Services. Interest rates for short-term savings pay less than 1 percent. “The crisis is behind us,” he said. Companies “don’t need this much cash anymore.”

Stronger-than-expected earnings reports are also lifting stocks. ’Dean Foods, ’Activision Blizzard and others reported earnings that beat analysts’ expectations.

Shares in Dean Foods, a dairy producer, jumped 11.5 percent. Dean had a stronger start to the year than it expected and raised its forecast for full-year earnings.

The Dow Jones industrial average rose 75.68 points, or 0.6 percent, to close at 12,760.36. The Standard Poor’s 500-stock index rose 10.87 points, or 0.8 percent, to 1,357.16. The Nasdaq composite index climbed 28.64 points, or 1 percent, to 2,871.89.

Nearly five shares rose for every one that fell on the New York Stock Exchange. Trading volume was 3.5 billion shares.

European stock markets and the euro rose on hopes that Greece would get another financial bailout to help it avoid a restructuring of its debts.

A restructuring — a renegotiation of existing debt deals — could have repercussions for Europe’s financial system, causing losses at banks holding Greek bonds. Germany’s DAX rose 1.2 percent. The FTSE 100 index of leading British shares was up 1.3 percent.

Earlier in Asia, Japan’s Nikkei 225 closed up 0.3 percent to 9,818.76, with shares of Chubu Electric Power rising 1.9 percent after the Japanese utility agreed to a government request to shutter three nuclear reactors at the Hamaoka coastal power plant.

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