All data is delayed
See More

US stocks rocket after fiscal cliff deal

Jan 03 2013 07:35

New York - US stocks took off flying on the first trading day of the new year on Wednesday after Congress reached a last-minute deal to avert the fiscal cliff, avoiding forcing the economy back into recession.

The S&P 500 soared 2.5%, its best rise since December 20, 2011, as traders shrugged off the specter that a new deficit fight between Democrats and Republicans was just weeks away to go on a buying spree.

The Dow Jones Industrial Index closed up 308.41 points at 13,412.55.

The broad-based S&P 500 added 36.23 at 1,462.42, while the Nasdaq outperformed with a 92.75 point gain, to 3,112.26.

The surge, which saw a number of blue-chip companies racking up three percent-plus gains, wrapped up an extraordinary new year run on global bourses, all encouraged that Washington would avoid the growth-crunching tax hikes and spending cuts of the cliff.

"It may have come at the last minute, but US lawmakers finally managed to find some common ground by voting through a package of policies designed to avoid the immediate fiscal cliff," noted ETX Capital trader Joe Rundle.

Also helping was positive purchasing managers index data for manufacturing in China, India and the United States, while eurozone activity remained in contraction.

Among leading companies, AT&T rose 3.8%, Microsoft 3.4%, Apple 3.2%, and IBM 2.5%.

Auto-sharing service Zipcar roared 47.8% higher after car-rental giant Avis announcing plans to buy it in a deal valued at $500m. Avis rose 4.8%.

Boeing rose 2.3% after announcing an order from leasing company Aviation Capital Group for 60 of its new 737 MAX jetliners, a deal worth $6bn at current list prices.

Fresh food and fruit giant Dole plunged 13.4%, hit by a statement that its global banana business could suffer due to the huge impact that December's Typhoon Bopha had on the Philippine banana crop.

"The current estimated impact to the Asian banana industry is a loss of 30 million 13-kilo boxes, which is approximately 14 percent of the Asian banana industry on an annualized basis," the company said.

Another loser was bookseller Barnes & Noble, which late last month admitted its Nook e-reader sales over Christmas were disappointing.

Bond prices fell, driven by the news of the fiscal cliff deal. The 10-year yield rose to 1.84% from 1.76% on Monday, while the 30-year jumped to 3.05% from 2.95%. Bond prices and yields move inversely.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

wall street  |  markets


Read Fin24’s Comments Policy publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


With infrastructure spending having been identified as one of the key focus areas of the National Development Plan, tradesmen will continue to play a critical role in growing the South African economy through their skills..

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

A 30% a month return on investment is:

Previous results · Suggest a vote