Dow up 308 as tax deal cheers investors
The market opens the year higher for a record fifth straight time. Investors worldwide hail the fiscal cliff bill -- especially investors in dividend-paying stocks. Apple, US Steel and Facebook are among the top performers. Gold and oil move up.
Don't look now, but the stock market set a record on Wednesday. In the process of generating its biggest rally in more than a year, the major averages opened higher on the first day of the year for a record fifth year in a row.
The Dow Jones industrials ($INDU) closed up more than 300 points, and the major averages had their largest gains on an opening day of trading this century. The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) also enjoyed record-setting days.
The catalyst is obvious: Markets around the world heaved a big sigh of relief that Congress agreed to a deal that would keep Bush-era tax cuts in place for all but the most affluent. The bill raises the top tax rate for the most affluent Americans.
The Dow soared 308 points to 13,413. The S&P 500 added 36 points to 1,462. And the Nasdaq climbed 93 points to 3,112. The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, gained 86 points to 2,746. The point gains for the Dow, S&P 500 and Nasdaq were their biggest since Nov. 30, 2011, when they rose 490, 52 and 105 points, respectively. The percentage gains -- 2.35%, 2.54% and 3.07%, respectively -- were the best since 2009.
There is a risk, however, that the rally may be short-lived. A more contentious fight between Democrats and Republicans in Congress is ahead over raising the nation's debt ceiling and over spending cuts required under the 2011 budget deal.
"House Republicans can be humiliated for only so long," Greg Valliere of the Potomac Research Group wrote clients on Wednesday morning. "They're itching for fights where they have leverage." And they potentially have lots of leverage over the debt ceiling and spending.
One big reason for the rally was that tax rates on dividends were largely left alone.
If you're single earning $400,000 a year or more or married earning $450,000, you'll pay 20% on your dividend income. For everyone else, it's 15%. Stocks paying big dividends like AT&T (T), Verizon Communications (VZ) and Consolidated Edison (ED) jumped 2% or more as a result.
Still, the Dow, S&P 500 and Nasdaq still remain below their 2012 highs, set in September and early October. The S&P 500 is within 3 points of its post-crash high of 1,465.77, set Sept. 14.
The market had closed higher on four straight up opening days only twice: between 1973 and 1976 and between 2009 and 2012, according to Standard & Poor's Howard Silverblatt.
It is not uncommon, however, for the market to rise on the first trading day of the year. In fact, the market has moved higher on the first day of trading 10 times this century. Three of the four declines -- in 2000, 2001 and 2008 -- suggested difficult times were ahead.
All 30 Dow stocks were higher, led by Hewlett-Packard (HPQ), Caterpillar (CAT) and AT&T.
Energy stocks were the strongest sector of the S&P 500, where about 450 of its component stocks were higher. Also showing strength: semiconductors, steel, housing and airline stocks.
The S&P 500 leaders were U.S. Steel (X), Lam Research (LRCX) and LSI Logic (LSI). Also showing strength: MetLife (MET) and Viacom's Class B shares (VIAB).
Alexion Pharmaceuticals (ALXN) was the Nasdaq-100 leader, followed by Viacom, Regeneron Pharmaceuticals (REGN) and Wynn Resorts (WYNN). Facebook (FB), up $1.38 to $28, was higher on speculation its mobile advertising efforts will pay off.
Apple (AAPL), which represents more than 17% of the market capitalization of the stocks in the index, was up $16.86 to $549.03. The shares are up 9.5% since hitting a near-term bottom of $501.23 on Dec. 17.
In addition, shares of Zipcar (ZIP), the car-sharing company, were up $3.94 to $12.18 after agreeing to sell out to Avis Budget Group (CAR) for $12.25 in cash per share, or about $500 million, a 49% increase from Monday's close. The downside of the deal: Zipcar went public in 2011 at $18 and jumped to as high as $31.25 on the first day of trading and never came close to hitting that price again. It bottomed at $5.90 on Nov. 7.
European and Asian stocks also surged Wednesday, with stocks in Germany, the United Kingdom and France rising more than 2%. Hong Kong's Hang Seng Index jumped 655 points, or 2.9%, to 23,312.
The market rally pushed interest rates higher; the 10-year Treasury yield moved up to 1.832% from Monday's 1.756%.
Gold (-GC) settled up to $13 to $1,688.80 an ounce in New York. Crude oil (-CL) in New York settled at $93.12 a barrel, up $1.30. Brent crude in London was up $1.19 to $112.30.
There was OK news on manufacturing from the Institute for Supply Management. Residential construction spending also moved higher in November, the Commerce Department said, but construction spending overall fell for the first time since March because of a 5.5% decline in spending on federal construction projects.
But Chinese manufacturers enjoyed a strong end to the year with operating conditions improving at the fastest rate in 19 months, according to HSBC's latest Purchasing Managers' Index.
More on Money Now
21 million people employed by federal and statel goverrnents.
63 million people living on government assistance.
109 million people employed by the private sector.
Do the math, 109 million people cant continue to support 84 million people. Our ecomomy will crash soon and this bill will do nothing to stop it.
Hmmm let's see we are putting about $1.8 trillion new debt on the Federal Goverment's tab every year into the foreseeable future.
The only thing that will stop the adding of about $2 trillion a year to the national debt will be when we cross over and start to add $3 trillion to the national debt.
The debt crisis in Europe and Japan look very very small when compared to the debt crisis in America.
So the tax increase is going to add what about $50 billion to the tax revenue a year
that is a joke it will not even keep up with inflated government debt next year.
Pretty much 1 to 3 years is all we have left in the US before our economy totally collapses and it will collapse soon and very quickly.
Here we go....... Obama is continuing to destroy America and the American spirit. He has made middle class income the "new-evil-rich" and soon, the high side to hate will be anyone with anything.
His wish will be that big government is the default for everything and everyone. Looks like he's gonna get his way.
Pray for us all.
Hip Hip Hooray.... We FIXED.....
Thanks Mr president, Thanks Congress
Heard it said last week... "best to invest in hand baskets..."
Those 300 Dow points won't help America one bit. Making bigger wealthier platforms that won't and don't hire people is going to bite us really hard really soon. And then there's the war that follows.
I've read some of the posts here and it looks like a mix of wanting more revenues to spend and not enough cuts. The current occupant of the White House is a very progressive, marxist, social agenda proponent. Oh, redistribution is his plan. We (our national government) borrows nearly 1 / 2 of its current spending brewha. This is simply unsustainable, even common sense liberals understand if it continues we will all suffer a fate far far worse than anything the US has ever seen. It will surpass the suffering of the Great Depression. I support sequestering and Congress doing nothing to raise the debt ceiling, it may seem bad, but putting it off will be far harsher. I can hear the clacking of shoes in the halls of plenty (congress) running to get a straw. What might the straw be for....why,.. to slurp up the swill of pork and debt.
on health care
does it cost more to make uninsured go to emergency room, clogging the system, for a cold?, as oppsed to private practice
im just curious
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The major averages finished the Tuesday session near their lows with the Russell 2000 (-1.0%) leading the slide. The S&P 500 lost 0.5% with nine sectors ending in the red.
Equities indices started the day with modest gains and spent the first two hours of action in the neighborhood of their flat lines. Although the early trade lacked clear sector leadership, that could have been overlooked due to the strength among heavily-weighted sectors like health care (-0.3%), ... More
More Market News
The apparel chain takes a hard hit after blaming the weather for its quarterly sales decline. But cold temperatures don't explain the drop in full-year sales as well.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'