NEW YORK (AP) — Stocks rose on Wall Street as investors were encouraged by signs of progress in budget talks inWashington. 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 aConnecticutelementary school.
The Dow Jones industrial average was up 68 points at 13,203 as of 3:12 p.m. EST. The Standard & Poor’s 500 index climbed 10 points to 1,424 and the Nasdaq composite index rose 26 points to 2,997.
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. Citigroup gained $1.27 to $38.87 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 28 cents to $10.86.
Investors are currently favoring financial stocks over technology stocks, said Ben Schwarz, chief market strategist at Lightspeed Financial.
“The banks are ripping today,” Schwarz said. “People are looking for stability and the tech sector hasn’t given them any.”
Financial companies make up the best performing industry group in the S&P 500 this year, according to FactSet data. The group, which includes banks such as Wells Fargo & Co. and insurers such as Travelers, has gained 25 percent this year.
Apple rose $4.48 to $514.27 after the company said it sold more than 2 million iPhone 5s inChinain 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 and is trading close to its lowest since February.
InWashington, 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 inWashington.”
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 $2.94, 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.
Japanese stocks rose after the country’s Liberal Democratic Party regained power following a landslide election victory.
Brian Singer, partner at William Blair, a Chicago-based asset management firm, said investors were encouraged by the outcome, which gave the conservative party overwhelming control of Parliament. The Liberal Democratic party has promised greater economic stimulus spending and more action to end a destructive cycle of price declines, or deflation.
The note on the 10-year Treasury bond rose 3 basis points to 1.74 percent.
Other stocks moving today:
—American International Group rose 77 cents to $34.70 after the insurer said it was selling its remaining stake in the life insurer AIA Group. The Wall Street Journal said AIG may raise as much as $6.5 billion from the sale. AIG avoided collapse in 2008 with $182 billion in support from theU.S.government — the biggest of the Wall Street bailout packages — after suffering massive losses from investments in derivatives.
—Tenet Healthcare Co. gained 73 cents to $31.36 after Deutsche Bank raised its recommendation on the stock to “buy” from “hold.” The bank cited Tenet’s “compelling,” business and financial outlook over the next 12 to 24 months.