Stocks Surge as 'Fiscal Cliff' Deal Looms
NEW YORK ( TheStreet) -- The major U.S. indices surged late Monday after President Barack Obama emerged to say that a deal to avoid the so-called fiscal cliff was close to fruition but not yet finalized.
Investors remained positive through most of the final trading session in 2012, despite Congress' inability to immediately avert the fiscal cliff, when deep spending cuts and tax hikes will go into effect on Jan. 1.
The Dow Jones Industrial Average added 1.28%, or 166 points, to 13,104. The blue-chip index gained 7.26% in 2012.
"Investors are collectively disgusted with an impotent Congress. The risks to an economy with an existing output gap are serious, and even if an agreement is reached it appears to be so narrow in scope that the Fed will likely need to act again within months," said Sonny Tahiliani, managing director at MacroMoves.
Shares of Bank of America tacked on 2.2%. The bank sealed its spot as the top performing blue-chip, as shares of the company jumped 108.8% in 2012.
Advancers edged decliners by a 5.9-to-1 ratio on the New York Stock Exchange , and by a 4.2-to-1 ratio on the Nasdaq. Volume totaled 3.17 billion shares on the Big Board and 1.55 billion on the Nasdaq.
The S&P 500 surged 1.69%, or 24 points, to 1426. The S&P gained 13.41% in 2012. The Nasdaq spiked 2%, or 59 points, to close the year above 3,000 points at 3019. The tech-heavy index gained 15.91% in 2012 to post the largest increase among the major U.S. equity indices.
Reports surfaced early Monday that Senate Minority Leader Mitch McConnell and Vice President Joe Biden had made "major progress" toward a budget deal.
The negotiations between McConnell and Biden, according to Politico, could be closing in on an agreement that would raise taxes on those families who earn more than $450,000 and individuals with income at more than $400,000.
Congress failed to reach an agreement over the weekend as Democrats and Republicans went back and forth on where they should set a threshold of income for individuals and families.
Democrats had hoped to increase taxes on those individuals who had earned more than $360,000 each year and families with incomes of $450,000, but Senate Republicans suggested the individual tax hikes go to those earning $450,000 or more and on couples making a yearly amount of $550,000.
"There's still significant distance between the two sides, but negotiations continue," Senate Majority Leader Harry Reid said Sunday night.
Stocks fell on Friday as investors feared legislators would fail to reach any sort of deal by the Jan. 1 deadline.