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Overnight Markets: Wall Street jumps after ‘cliff’ deal

by Himanshu Singh on Jan 03, 2013 at 03:34

Overnight Markets: Wall Street jumps after ‘cliff’ deal

U.S. stocks surged in the new year’s first trading session on Wednesday, with the Standard & Poor’s 500 Index notching up its biggest gain in more than a year, after a last-minute deal in Washington to avert spending cuts and tax increases that threatened to derail the economy's growth.

The Dow Jones industrial average jumped 308 points, or 2.35%, to 13,413 at the close. The Standard & Poor's 500 Index gained 36 points, or 2.54%, to finish at 1,462. The Nasdaq Composite Index climbed 93 points, or 3.07%, to end at 3,112.

Congress passed a bill late on Tuesday to prevent huge tax increases and delay spending cuts that would have pushed the world's largest economy off a "fiscal cliff" and possibly into recession. However, the vote failed to resolve a major showdown over cutting the budget deficit. Spending cuts of $109 billion in military and domestic programmes were temporarily delayed.

Fight over budget cuts and the need to raise the debt ceiling will confront Congress about the same time in two months.

Information technology sector gained the most yesterday, with Hewlett-Packard climbing 5.4%. Apple rose 3.2% after a report that the most valuable tech company has started testing a new iPhone and a new version of its iOS software. Facebook advanced 5.2%.

Banks rose after news that U.S. regulators are close to securing another multibillion-dollar settlement with the largest banks to resolve allegations that they illegally cut corners when foreclosing on delinquent borrowers.

Bank of America Corp added 3.7% and Citigroup Inc gained 4.3%.

In deal news, shares of Zipcar Inc jumped 47.8% after Avis Budget Group Inc said it would purchase Zipcar for about $500 million in cash. Avis advanced 4.8%.

Elsewhere, U.S. Steel Corp. climbed 8.6% after the shares were upgraded at Credit Suisse Group AG.

In Asia, most Asian stocks gained on Thursday in morning session after an increase in US manufacturing and China’s services industries fueled optimism in the global economic recovery.

The MSCI Asia Pacific Excluding Japan Index rose 0.2% to 477 as of 10:07 a.m. in Hong Kong. Hong Kong’s Hang Seng Index was little changed. Australia’s S&P/ASX 200 Index gained 0.5% and New Zealand’s NZX 50 Index advanced 0.5%. South Korea’s Kospi Index slid 0.4%.

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