NEW YORK: Stocks on Thursday rose for a second day, lifting the Dow industrials into positive terrain for the week, as investors bet on at least a short-term fix to avert the so-called fiscal cliff in government budgets.
“I’m still expecting a deal. On the tax side, 98 percent of Americans will get to keep their Bush tax cuts on a permanent basis. Both sides of the partisan divide agree that this should happen. That’s actually a very big deal and very good for the economy,” Ed Yardeni, chief investment strategist at Yardeni Research Inc., wrote in a research note.
“The Democrats want to raise the top two tax rates, which apply to the top 2 percent of Americans earning $250,000 or more. The Republicans oppose doing so. Nevertheless, an outline of a compromise is taking shape,” said Yardeni.
The indexes came off their highs after House Speaker John Boehner declared that “no substantive progress” had been made in talks to reach a budget deal.
“The market has been doing a good job of jumping on almost every remark out of Washington and overshooting,” Elliot Spar, market strategist at Stifel Nicolaus, remarked in afternoon commentary.
The Dow Jones industrial average finished up 36.71 points, or 0.3 percent, to 13,021.82.
Walt Disney Co. shares climbed after the entertainment company and Dow component raised its dividend.
The Standard & Poor’s 500 index rose 6.02 points, or 0.4 percent, to 1,415.95.
“The S&P traded within 3 points of its 200-day moving average at 1,423 and then along comes Boehner. He has gone from optimistic to disappointed in about 24 hours,” Spar said.
Addressing a televised news conference, the Ohio Republican said Democrats were “not serious” about spending cuts.
The Nasdaq composite index gained 20.25 points, or 0.7 percent, to 3,012.03.
Treasury Secretary Timothy Geithner visited Capitol Hill for talks with congressional leaders on averting automatic spending cuts and tax increases set to begin in 2013.
Thursday’s economic reports drew little response from investors, who lately have bypassed any data in favor of paying attention solely to developments related to the budget talks.
The session’s U.S. economic reports included the National Association of Realtors saying pending home sales rose 5.2 percent in October, illustrating ongoing recovery in the housing market.
America’s economy expanded more than initially projected in the third quarter, the Commerce Department reported, with the nation’s economic growth rising to 2.7 percent in the period — up from an initial estimate of 2 percent but just under estimates calling for a 2.8 percent rise.