Stocks Rally as Fiscal Cliff Worries Ease
Stock surged in trading today, with all three major indexes finishing near session highs, amid hopes that the fiscal cliff can be averted after lawmakers expressed confidence in reaching a deal on reducing U.S.’s fiscal cliff deadline before the year-end deadline. Investors’ sentiment was also lifted by better than expected housing market data.
All sectors in the S&P 500 rallied today. The gains in the S&P 500 were led by Technology sector, which ended the day 2.53% higher. Basic Materials sector also surged, ending the day 2.31% higher. Industrials rose 2.32%.
Stocks got off to a strong start earlier today after congressional leaders late last week expressed confidence about reaching a deal on reducing the fiscal deficit before the deadline and avert the fiscal cliff. Concerns over the fiscal cliff had sparked a sell-off in risk assets in the last few days. Congressional leaders and President Obama began discussions on the fiscal cliff issue last Friday and early indications are that a deal will be sealed and the cliff will be averted. This boosted investors’ risk appetite in trading today.
Investors’ sentiment was further boosted by better than expected data from the housing market. According to the National Association of Realtors, existing home sales rose in the month of October to a seasonally adjusted annual rate of 4.79 million units. Meanwhile, a report from the National Association of Realtors showed that homebuilder sentiment rose for a seventh consecutive month in November.
Among the major gainers in trading today were Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR), which ended the day 11.32% higher at $27.33, Tyson Foods Inc. (NYSE: TSN), which ended the day 10.90% higher at $18.72, and Lowe’s Companies Inc. (NYSE: LOW), which ended the day 6.19% higher at $33.96.
European markets also rallied in trading today, with the FTSE 100 Index in London closing 2.36% higher, and the CAC 40 Index in Paris closing 2.93% higher. Asian markets also edged higher overnight, with the Nikkei 225 Index in Japan closing 1.43% higher and the Hang Seng Index in Hong Kong closing 0.49% higher.