U.S. stocks rally on hopes for fiscal cliff deal, Dow gains 1.28%
Published Dec 31, 2012 04:23PM ET
Failure to outright avoid the cliff could result in the U.S. sliding into a recession next year.
At the close of U.S. trading, the Dow Jones Industrial Average finished up 1.28%, the S&P 500 index was up 1.69%, while the Nasdaq Composite index rose 2.00%.
U.S. lawmakers spent the last day of the year scrambling to agree on a way to avoid the fiscal cliff, which the nonpartisan Congressional Budget Office estimates will contract the economy by 0.5% if left fully untreated.
Earlier Monday, President Barack Obama said an agreement was in sight though stressed nothing had been finalized yet, while lawmakers continued to spend the day working to find a solution.
While no deal was struck as of late Monday, investors went long on stocks on hopes both sides will strike a deal either by the end of the day or in early 2013, as tax hikes and spending cuts will take time to materialize, which gives policymakers some elbow room to work.
Leading Dow Jones Industrial Average performers included Hewlett-Packard, up 4.02%, Caterpillar, up 3.17%, and General Electric, up 2.59%.
The Dow Jones Industrial Average's worst performers included DuPont, up 0.51%, Microsoft, up 0.60%, and UnitedHealth Group, up 0.71%.
European indices, meanwhile, finished mixed.
After the close of European trade, the EURO STOXX 50 rose 0.35%, France's CAC 40 rose 0.58%, while Germany's DAX 30 finished down 0.57%. Meanwhile, in the U.K. the FTSE 100 finished down 0.47%.
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Written By: Investing.com
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