U.S. stocks rise on hopes for budget deal, Europe
NEW YORK -- The stock market finally shook its post-election slump.
Investors seized on hope that Washington will reach a deal on the federal budget and drove stocks to their biggest gain in two months. A pair of strong corporate earnings reports also helped.
The Dow Jones industrial average closed up 207 points, or 1.7 percent. Since President Barack Obama and a divided Congress were returned to power Nov. 6, the Dow had fallen six out of eight days and slid a total of 650 points.
Obama and congressional leaders are in talks to avoid going over a "fiscal cliff" on Jan. 1, when tax increases and mandatory government spending cuts are set to take effect.
While Obama and Republicans appear at odds on whether tax rates for the wealthiest Americans should rise, lawmakers suggested over the weekend that progress is possible.
"I can tell you that the fiscal cliff is focusing the mind," said Illinois Sen. Richard Durbin, a Democrat, said on CNN's "State of the Union." He said he had heard from Republicans "the beginning of a negotiation."
Comments like those comforted investors, who are grasping for signs that the negotiations might go somewhere.
"It is quite clear that both sides want to come to a compromise and that a reasonable compromise is available," David Kelly, chief global strategist for J.P. Morgan Funds, wrote in a note to clients.
Other financial analysts noted that there have been few substantive developments to drive the market's swings, and suggested the market's surge will be short-lived.
The Dow finished up 207.65 points at 12,795.96. The Standard & Poor's 500 index rose 27.01 points, or 2 percent, to 1,386.89. The Nasdaq composite average gained 62.94, or 2.2 percent, to 2,916.07.