Stocks Soar as Budget Deal Takes Shape
NEW YORK ( TheStreet) -- Major U.S. stock averages soared Tuesday as signs of progress on the "fiscal cliff" talks and improving homebuilder confidence lifted investors' spirits.
In addition, rating agency Standard & Poor's upgraded sovereign credit ratings on Greece after its completion of a distressed debt buyback. Eurozone member states have a "strong determination" to keep Greece's membership in the region, S&P said.
Expectations for a budget resolution continued to build as President Barack Obama on Monday night approached Republicans with a counter-offer that included lowering his demand for higher taxes on wealthy Americans.
House Speaker John Boehner emerged Tuesday morning and proposed a so-called "Plan B," which the White House subsequently rejected. Stocks continued to climb despite the morning's political posturing.
In recent days, Republicans appeared to have been softening their position on higher taxes and Democrats seemed to have become more open to entitlement concessions, though progress toward a deal is still slow going. Republican Sen. Bob Corker on Tuesday highlighted this, saying, "We're not close to a deal."
"Still, markets are trading with a positive tone as global equities are currently higher. However, we would advise caution in the headline-driven environment," said Eric Viloria, senior currency strategist at FOREX.com in New York.
The Dow Jones Industrial Average rose 116 points, or 0.87%, to 13,351. The blue-chip index began the session up 8.5% this year.
McDonald's (MCD) shares advanced 0.68% as the fast food chain requested that franchisees stay open on Christmas Day, Ad Age reported.
Boeing (BA) shares gained 1.2%. The aerospace giant lifted its quarterly dividend by 10% to 48.5 cents a share and said it plans to buy back $1.5 billion to $2 billion of its shares next year.
General Electric shares fell 1.1% amid reports that it's close to reaching a deal to buy Italian aerospace supplier Avio for about $4 billion.
All sectors in the broader market were trading higher, spearheaded by gains in energy, technology, consumer cyclicals and capital goods.
Volumes totaled 4.10 billion on the New York Stock Exchange and 2.01 billion on the Nasdaq. Advancers were outpacing decliners 2.8-to-1 on the Big Board and 2.6-to-1 on the Nasdaq.
As expected Tuesday, the National Association of Home Builders said its Housing Market Index showed that homebuilder confidence in December ticked up to 47, the highest since April 2006. The December number was up 2 points from a slightly downwardly revised November reading.