Published December 18, 2012
NEW YORK – Stocks rose modestly on Tuesday as investors speculated negotiations between Democrats and Republicans would lead to a deal to avert the "fiscal cliff."
The market's gains followed a steep rally in the previous session, which lifted the S&P 500 to its highest in nearly two months.
Republican House Speaker John Boehner said he has hope for a broader deal on the budget talks and was still talking with President Barack Obama on the matter.
Obama made a counter-offer to Republicans on Monday night that included a major change in position on tax hikes for the wealthy, according to a source familiar with the talks.
The report followed a meeting between Obama and Republican House Speaker John Boehner, who has edged closer to Obama's position by proposing higher taxes on those who earn $1 million or more and extending lower tax rates for everyone else.
"We've been getting a series of snippets suggesting accommodation from both Boehner and Obama, which is feeding the sense in markets that we could get a deal," said Michael Holland, chairman of Holland & Co in New York.
Investors have been reluctant to make big bets in the face of uncertainty over the fiscal cliff, a combination of steep tax hikes and spending cuts that many fear could push the economy into recession if they take effect next year.
"You can never discount the possibility that the government will do something dumb and screw this up, but right now the market is happy over the prospects for a deal," said Holland, who oversees $4 billion in assets.
The Dow Jones industrial average was up 17.27 points, or 0.13 percent, at 13,252.66. The Standard & Poor's 500 Index was up 3.69 points, or 0.26 percent, at 1,434.05. The Nasdaq Composite Index was up 15.28 points, or 0.51 percent, at 3,025.88.
Tech shares were among the strongest of the day, and gains in large-cap technology shares lifted the Nasdaq. Seagate Tech rose 3.4 percent to $29.01 while F5 Networks Inc rose 2.4 percent to $94.84.
The New York Times said that Wal-Mart Stores Inc's Mexican affiliate routinely used bribes to open stores in desirable locations. The story cited 19 instances of the retail giant paying off local officials. In a statement Monday night, Wal-Mart spokesman David Tovar said the company was looking into the allegations. Shares of Wal-Mart, a Dow component, fell 0.4 percent to $68.94.
Arbitron Inc surged 23 percent to $46.87 after Nielsen Holdings NV agreed to buy the media and marketing research firm in a deal worth $1.26 billion. Nielsen rose 1.3 percent to $30.
Baker Hughes Inc said third-quarter margins and revenue would be below its expectations because of lower land drilling activity and price erosion. Shares rose 2.6 percent to $41.73, reversing a decline in the premarket session.
(Editing by Kenneth Barry)