Monday, December 31, 2012

Stocks leap higher on 'fiscal cliff' hopes

Stocks staged a rally Monday afternoon on signs a deal in the "fiscal cliff" was near, with the Dow Jones industrial average closing up 166 points, or 1.3%.

Jumping higher were the Nasdaq composite, up 60 points or 2% and the S&P 500, gaining 24 points or 1.7%. 

The Dow jumped more than 130 points to about 13,068 around 3 p.m. ET after Senate Minority Leader Mitch McConnell said a deal was near to avoid raising taxes on most Americans.

U.S. stocks had struggled for most of the last day of the year, with the "fiscal cliff" just hours away and Republicans and Democrats yet to hammer out a budget deal.

The Dow opened lower, with investors disappointed that politicians hadn't reached an agreement over a weekend of terse, stop-and-go negotiating. With no clarity on whether a deal would get done, and what it would look like if it did, the Dow spent the morning flitting between small gains and losses.

The Dow and the other major stock indexes turned higher at midday after a few signs that a deal was emerging. The Associated Press and other media outlets reported that both sides had agreed on a few key points on taxes and unemployment benefits. 

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