Stocks Swell on Deal to Avert 'Fiscal Cliff'; Dow Surges 308 Points
NEW YORK ( TheStreet) -- Major U.S. stock averages roared Wednesday as global risk appetite surged on the first trading day of the year after the House managed to pass the Senate's 11th-hour agreement on averting the "fiscal cliff."
The Dow Jones Industrial Average surged 308 points, or 2.4%, to 13,413. The blue-chip index had its biggest single-day gain since Nov. 19.
Hewlett-Packard is evaluating the sale of businesses that don't meet goals more than a year after CEO Meg Whitman said she didn't plan to spin off the PC division, according to a Bloomberg report. Shares advanced 5.1% on Wednesday.
Intel's effort to develop an Internet-based TV service and associated hardware is taking longer than expected, people familiar with the company's plans told The Wall Street Journal , in part due to delays in reaching content agreements with media companies. Shares closed up 3.7%.
The vast majority of sectors in the broad market advanced, spearheaded by gains in basic materials, capital goods, technology and financials. Only the health care-sector declined.
Volumes were heavy in the session with 4.16 billion shares swapping on the New York Stock Exchange and 2.1 billion shares on the Nasdaq. Advancers were far outpacing decliners by a ratio of 9.7-to-1 on the Big Board and 6.6-to-1 on the Nasdaq.
David Bianco and Priya Hariani, market strategists at Deutsche Bank, said that although the "fiscal cliff" deal only covers taxes and pushes the spending issues off for a couple of months, they're "pleased" that it keeps the top dividend and capital-gains tax rates low and equal at 23.8%, and are raising their 12-month S&P 500 target to 1,575 from 1,500.
Tax hikes are still set to take place but to a more diluted degree and unemployment benefits will be extended until the end of the year. Planned spending cuts scheduled to kick in this month are to be postponed for two months.
"It sets up another showdown within weeks, which has the potential to be even more disruptive given the U.S. debt ceiling must be raised at the same time if technical default is to be avoided," said Gareth Berry, a currency strategist at UBS. "But, for now, the conditions seem right for a moderate celebratory rally in risk assets, however brief, and we would be reluctant to fight this just yet."