MARKET SNAPSHOT: U.S. Stocks Rise On Hopes For Budget Deal
12/11/2012| 03:34pm US/Eastern
By Polya Lesova and Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks lost some steam Tuesday, after Senate Democratic Leader Harry Reid threw some cold water on hopes for a quick deal to prevent deep spending cuts and tax hikes early next year.
"The markets are holding out hope this is all a big bluff," Ethan Harris, co-head of global economics research at Bank of America, said of the back-and-forth on Capitol Hill that has not yet resulted in an agreement.
Reid said Tuesday afternoon a deal to avoid the fiscal cliff of spending cuts and tax increases will be difficult to reach before Christmas.
The mood had been buoyed by a report in The Wall Street Journal that budget negotiations between the White House and House Speaker John Boehner have made steady progress in recent days.
Addressing the U.S. House of Representatives Tuesday, Boehner said he was "hopeful" an accord would be reached. The Ohio Republican also said his party was waiting for President Barack Obama to outline specific spending cuts.
Common sense would dictate the White House and Republicans reach a compromise to avoid going over the fiscal cliff, but allowing the battle to continue so close to Dec. 31 raises the risk a deal won't be reached, said Harris, speaking at a BofA Merrill Lynch conference in New York Tuesday.
"It'll probably go to the last second, and there's a decent chance we go over the cliff, and it will be spring before this is resolved. There is a high risk Obama and Boehner agree in principle to a deal and Congress doesn't approve it," said Harris.
The technology sector led the market higher, with Apple Inc. (>> Apple Inc.) and Texas Instruments Inc. (>> Texas Instruments Incorporated) posting particularly strong gains.
After surging as much as 136 points, the Dow Jones Industrial Average (DJI) was lately up 63.54 points, or 0.5%, at 13,233.42.
Chip-manufacturer Intel Corp. (>> Intel Corporation) was the top gainer in the Dow, rising 2.3%.
The S&P 500 Index (SPX) advanced 6.98 points, or 0.5%, to 1,425.53, with the technology sector the biggest gainer and utilities the heaviest weight among its 10 major sectors.
The Dow industrials and the S&P 500 are both on track for a fifth consecutive trading day of gains.
TripAdvisor Inc. (>> Tripadvisor Inc) was the top gainer in the S&P 500 after Liberty Interactive Corp. (>> Liberty Media Corp (Starz)) said it acquired voting control of the hotel-reviews site.
The Nasdaq Composite (RIXF) climbed 28.61 points, or 1%, to 3,015.55.
For every two stocks falling three gained on the New York Stock Exchange, where almost 441 million shares traded as of 3:25 p.m. Composite volume topped 2.8 billion.
Apple's shares rose. ISI Group cited China Unicom's announcement of more than 300,000 preorders for the iPhone 5 set to go on sale Friday. China Unicom is China's second-largest wireless carrier.
Shares of Delta Air Lines Inc. (>> Delta Air Lines, Inc.) rose after it agreed to acquire a 49% stake in Virgin Atlantic Airways Ltd. from Singapore Airlines.
American International Group Inc. (>> American International Group, Inc.) climbed after the Treasury Department said it would sell its remaining shares of the insurance company, nearly closing out its largest rescue that came with the 2008 financial crisis.
Federal Reserve officials started a two-day policy-setting meeting on Tuesday, with Wall Street expecting central bankers to opt for more bond purchases when Operation Twist expires this year.
Stock-index futures drew an early lift from an unexpectedly upbeat gauge of German investor sentiment, which rose sharply in December.
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