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U.S. stocks drifted back into positive territory Thursday afternoon as the markets continue to react to any and all headlines out of Washington on the fiscal-cliff talks.
As of 2:47 p.m. ET, the Dow Jones Industrial Average gained 48.80 points, or 0.37%, to 13033.74, S&P 500 advanced 7.41 points, or 0.53%, to 1417.33 and Nasdaq Composite advanced 22.23 points, or 0.74%, to 3013.99. The FOX 50 picked up 5.88 points, or 0.56%, to 1049.42.
The blue chips dipped into the red in late morning trading after pessimistic comments from House Speaker John Boehner, wiping out a rally of as much as 85 points earlier in the session.
The knee-jerk reaction to comments from Boehner, who had just left a meeting with Treasury Secretary Tim Geithner, underscore the serious jitters on Wall Street about the ability of Washington to avoid sending the U.S. over the fiscal cliff.
Just a day earlier upbeat fiscal cliff comments from Boehner helped wipe out a triple-digit slide on the Dow, carrying the blue chips to a 107-point gain on the day.
“The drift in the stock market is completely dependent on investor perceptions of a constructive outcome for the fiscal cliff talks. Company specific news and macroeconomic data points have been virtually irrelevant,” Peter Kenny, a managing director at Knight Capital Group (NYSE:KCG), wrote in a note.
Trading desks across the globe have been fixated on budget talks in Washington, D.C. Lawmakers have been working on a deal to avoid the so-called fiscal cliff -- a painful mixture of spending cuts and tax hikes set to go into effect next year.
Yet Boehner warned on Thursday that there have been no substantive progress in the negotiations in the last two weeks. The House speaker said he has no idea what compromises the White House is willing to make on spending cuts and said he is only willing to accept an increase in revenue in tandem with serious spending cuts.
"I'm going to do everything I can to avoid putting the American people" and the U.S. economy through the "fiasco" of going over the fiscal cliff, Boehner said.
Other lawmakers were far more optimistic. Democratic Sen. Charles Schumer said he is confident a deal can be reached by Christmas and said progress is being made behind the scenes.
The comments come after a report earlier that President Obama and Boehner had a "curt" telephone conversation about the cliff on Wednesday. The House Speaker wants Obama to move off of his position on tax rates, but the president won't move and instead suggested Boehner lay out an alternative.
“The market is electing to believe in the prospects of a deal. I certainly hope that Washington does not disappoint,” said Kenny.
Earlier in the day traders' attention was briefly diverted from the fiscal cliff thanks to a slew of new reports on the state of the U.S. economy.
Stocks briefly turned sharply higher, with the blue chips up about 80 points, after the National Association of Realtors said contracts to buy previously-owned U.S. homes rose by 5.2% in October from September. The data provide further evidence of the housing recovery as the markets had been anticipating a much more modest increase of just 0.8%.
On the jobs front, the Labor Department said initial claims for unemployment benefits declined by 23,000 to 393,000 last week. Economists had forecasted a drop to 395,000 in this recently-volatile measure that has been influenced by Hurricane Sandy. As has been the case, the government raised its estimate for the prior week to 416,000 from 410,000.
The four-week moving average of claims, which can be a better measure given the recent volatility, rose by 7,500 to 405,250 -- the highest level since October 2011. Claims for continuing benefits tumbled by 70,000 to 3.287 million.
Separately, the Commerce Department said U.S. gross domestic product grew by 2.7% in the third quarter, up from its advance estimate of just 2.0% but just under consensus calls for 2.8%.
On the corporate front, shares of retailers were under pressure after a number of companies reported underwhelming November same-store sales, including Target (NYSE:TGT), Macy’s (NYSE:M) and Gap (NYSE:GPS).
Overall, Thomson Reuters estimates preliminary November same-store sales gained just 1.6%, well below forecasts from analysts for an increase of 3.3%.
In commodities markets, oil futures rallied after falling for the third day in a row on Wednesday. The benchmark contract traded in New York gained $1.58, or 1.83%, to $88.07 a barrel. In metals, gold advanced $10.70, or 0.62%, to $1,727.20 a troy ounce.
The Euro Stoxx 50 rallied 1.37% to 2581.69, the U.K.'s FTSE 100 gained 1.15% to 5870.30 and the German DAX rose 0.78% to 7400.96.
In Asia, the Japanese Nikkei 225 lurched higher by 1% to 9401 and the Chinese Hang Seng jumped 1% to 21923.