Wall Street opened higher on Monday as investors found encouragement in signs of movement over the weekend in "fiscal cliff" negotiations.
Republican House Speaker John Boehner edged slightly closer to President Barack Obama's key demands as they try to avert the tax hikes and spending cuts that are set to take effect in the new year.
Continue Reading Below
Sources familiar with the talks confirmed that Boehner proposed extending low tax rates for everyone who has earned less than $1 million, and rates would rise for wages above that. But Boehner's new positions were still far from those held by Obama.
"The universal feeling is still that this will probably be solved" but it might take until the last minute, said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.
Uncertainty over when and if a federal budget deal will be done has kept investors cautious in what is already a normally quiet trading period heading into year-end.
Investors are worried the economy could slide back into recession if the full brunt of the tax and spending changes is allowed, though most expect a deal will eventually be reached.
The market shrugged off Monday's less cheery economic data that showed manufacturing activity in the New York region declined for a fifth month in a row in December.
The Dow Jones industrial average gained 67.89 points, or 0.52 percent, to 13,202.90. The Standard & Poor's 500 Index rose 9.29 points, or 0.66 percent, to 1,422.87. The Nasdaq Composite Index added 15.74 points, or 0.53 percent, to 2,987.07.
If the S&P 500 sustains its gains through the session, the index would snap a two-day losing streak. Despite the uncertainty of fiscal cliff talks, the S&P has performed well in the last month, grinding higher in mostly light volume.
Markets are likely to continue that sort of momentum through the end of the year, which is typically a bullish time for stocks, said Detrick.
Clearwire Corp agreed to sell the rest of the company to Sprint Nextel Corp for a slightly sweeter $2.2 billion offer, days after minority shareholders criticized the previous bid as too low. Clearwire tumbled 12.2 percent to $2.96, while Sprint was up 0.9 percent at $5.60.
Apple Inc slipped 0.7 percent to $506.30 after two firms cut their price targets on the stock.
The tech giant said it sold more than 2 million of its new iPhone 5 smartphones in China during the three days after its launch there on Friday, but the figures did not ease worries about stiffer competition. Apple shares have tumbled nearly 30 percent in about three months.
(Editing by Kenneth Barry)