Stocks Pare Gains on Late-in-Day Fiscal-Cliff Concerns
NEW YORK ( TheStreet) -- Major U.S. equity averages held gains on Tuesday despite a final-hour scare by Senate Majority Leader Harry Reid's comments on the so-called fiscal cliff.
Stocks were initially buoyed by confidence over fiscal-cliff negotiations and an upbeat economy in Germany, Europe's largest nation. The two-day Federal Open Market Committee meeting got under way, heightening expectations the central bank will continue to keep interest rates low.
Societe Generale noted that, after playing out on TV screens, fiscal-cliff negotiations seemed to have shifted to a quieter stage and that the near-silence about the weekend meeting between President Barack Obama and House Speaker John Boehner has led to speculation that the two sides are getting closer to a deal.
Reid emerged Tuesday afternoon to tell reporters that he believed it would be "extremely difficult" for legislators to reach a deal to avoid the cliff before Christmas.
Still, investors got a confidence boost from a leap in Germany's ZEW economic sentiment survey to 6.9 in December, which was much better than the minus 12 expected by economists and the previous measure of minus 15.7. It contrasted with the recent sobering growth forecast for Germany from the Bundesbank and euro area from the European Central Bank.
The Dow Jones Industrial Average gained 79 points, or 0.6%, to 13,248. The blue-chip index, which has been up four consecutive sessions, began the day up more than 8% in 2012.
The S&P 500 rose 9 points, or 0.65%, to 1,428.
The Nasdaq gained 35 points, or 1.2%, to 3,022.
All sectors in the broader market were in positive territory, led higher by technology, health care, conglomerates and basic materials.
Volumes reached 3.58 billion shares on the Big Board and 1.87 billion shares on the Nasdaq. Advancers outpaced decliners 2.1-to-1 on the New York Stock Exchange and 2.5-to-1 on the Nasdaq.
The FOMC -- the Federal Reserve's rate-setting arm, began its two-day meeting Tuesday. It's widely expected that the talks will be followed by the announcement of a $40 billion to $45 billion a month Treasury purchase program targeted on longer-dated Treasuries, expanding their total purchases per month, including mortgage-backed securities, to $85 billion.
Drew Matus, senior U.S. economist at UBS, said the ultimate size of the program will depend on whether the Fed believes market liquidity is impaired and if they view "Operation Twist" as having been a success.