Stocks move higher as budget talks progress

NEW YORK (AP) ? Stocks rose on Wall Street as investors were encouraged by signs of progress in budget talks in Washington. Just two weeks remain before tax increases and government spending cuts take effect if no deal is reached.

On the floor of the New York Stock Exchange, stock traders paused for a minute of silence at 9:15 a.m. EST to remember the 20 children and seven adults killed Friday in a gunman's rampage through a Connecticut elementary school.

The Dow Jones industrial average was up 83 points at 13,218 as of 12:15 p.m. EST. The Standard & Poor's 500 index climbed 13 points to 1,426 and the Nasdaq composite index rose 28 points to 2,999.

Marc Chaikin, CEO of the Philadelphia-based market research firm Chaikin Analytics, said investors became more hopeful for a resolution in the budget talks after House Speaker John Boehner made an offer to increase tax rates on high-income Americans.

"The fiscal cliff is obviously foremost on everyone's mind," Chaikin said.

Banks were among the best-performing stocks. Citibank gained 89 cents to $38.49 after Raymond James upgraded its target price on the stock to $52 from $44. In a note to clients, the brokerage reaffirmed its "Strong Buy" rating on the stock, citing the "improving fundamental outlook." Bank of America also gained 31 cents to $10.89.

Apple rose $7 to $516.79 after the company said it sold more than 2 million iPhone 5s in China in their first three days of availability, setting a record for that market. The technology giant's stock has fallen 27 percent since it closed at a record $702.10 in September.

In Washington, there appeared to be movement in long-stalled budget talks aimed at avoiding tax increases and government spending cuts set to take effect Jan. 1, which are known as the "fiscal cliff."

Indexes opened higher following the news that Boehner, a Republican, offered $1 trillion in higher tax revenue over 10 years and an increase on the top tax rate for people making $1 million per year, to 39.6 percent from 35 percent. The market moved higher still after news crossed shortly before noon that Boehner went to the White House to meet with President Barack Obama.

If congressional Republicans and the White House can't reach a deal by Jan. 1, tax cuts enacted a decade ago for all Americans will expire, and government programs will be cut across the board. The combination could lead to a recession.

Wall Street has been relatively calm in recent weeks, but David Kelly, chief global strategist for J.P. Morgan Funds, said that by Friday the market will be "squarely focused on what is or is not happening in Washington."

He suggested in a note to clients that the markets will not have "priced in" any outcome, "setting the stage for a market rally with an agreement and a slump with stalemate."

Clearwire slid 43 cents, to $2.95, after Sprint announced terms of its buyout deal for the wireless Internet access company. Sprint's price of $2.97 per share was below Clearwire's closing stock price Friday.

Stocks gained even after a monthly survey of manufacturing in New York state area, carried out by the Federal Reserve Bank of New York, showed that business conditions for manufacturing in New York declined in December. The reading fell to minus 8.1 for the month from minus 5.2 a month earlier.

A survey of top business economists released Monday by the National Association for Business Economics found that most expected modest economic growth in 2013, led by rising demand for housing.

Later this week, investors will get reports on housing starts and existing home sales, plus a final read from the government on economic growth from July through September.

Personal income and spending figures out Friday could offer a read on consumer spending behavior at the start of the holiday shopping season, Kelly wrote to clients.

The note on the 10-year Treasury bond rose 3 basis points to 1.74 percent.

Source: http://news.yahoo.com/stocks-move-higher-budget-talks-progress-174312081--finance.html

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