Stocks Rebound as Investors Grow Upbeat on Economy, Fiscal-Cliff Deal
NEW YORK ( TheStreet) -- Major U.S. stock averages rebounded Thursday after the S&P 500's worst slump in five weeks the day before. Investors cheered better-than-expected economic growth and grew confident President Obama and Republicans would soon work out a deal to avert the "fiscal cliff."
The Dow Jones Industrial Average climbed 60 points, or 0.45%, to 13,312. The blue-chip index began the session up 8.4% this year.
The S&P 500 tacked on 8 points, or 0.55%, at 1,444.
Breadth was slightly positive, with gainers outpacing laggards 25 to five.
The Nasdaq rose 6 points, or 0.20%, to 3,050.
The broader market sectors were trading higher, with conglomerates, financials, consumer cyclicals, energy and capital goods leading the way.
Advancers edged decliners by a ratio of just 2.1-to-1 on the New York Stock Exchange and 1.6-to-1 on the Nasdaq. Volumes totaled 3.63 billion shares on the Big Board and 1.68 billion shares on the Nasdaq.
"While negotiations on the fiscal cliff have stalled over the last couple of days, the likelihood of going past year-end without any resolution has not increased," Goldman Sachs economists said in a report. "This is due, in part, to progress made to date in negotiations between President Obama and Speaker Boehner. However, it is also because it has become increasingly possible that if those negotiations fail, a fallback plan could be passed to avert at least some of the fiscal restraint scheduled for 2013, with remaining issues potentially revisited in early 2013."
At Boehner's weekly press conference Thursday, he said the House would vote on his "Plan B" later in the day. Senate Majority Leader Harry Reid had said in an earlier appearance that the Senate would flatly reject the deal. Boehner told reporters he was not convinced it would die in the upper chamber of Congress. Boehner said the real issue is about spending, and that the president and Democrats haven't accomplished their part on proposed cuts.
In the economy, the Labor Department reported Thursday that initial jobless claims for the week ended Dec. 15 rose 17,000 to 361,000 from the previous week's upwardly revised figure of 344,000. Economists, on average, expected initial claims to rise to 357,000.
The four-week moving average was 367,750, a decrease of 13,750 from the previous week's unrevised average of 381,500.
Yelena Shulyatyeva, the U.S. economist at BNP Paribas, said 361,000 claims are more consistent with the underlying trend. Job-market conditions have changed little fundamentally in recent months, she said.
Meanwhile, Dan Greenhaus, chief global strategist at BTIG, noted that any improvement in weekly claims "won't matter a bit" if the economy entered the new year with fiscal-cliff-induced uncertainty.