US Stocks Rise on Hopes for Budget Deal, Europe
The stock market is starting the holiday week with a big gain.
The Dow Jones industrial average was up 153 points at 12,741 in the first half-hour of trading Monday. The Standard & Poor’s 500 index rose 19, or 1.4 percent, to 1,378. The Nasdaq composite average gained 43, or 1.5 percent, to 2,895.
European markets rallied before U.S. markets opened. Financial analysts said it was because of optimism that leaders in the United States will reach a deal to avoid tax increases and government spending cuts set to take effect Jan. 1.
"It is quite clear that both sides want to come to a compromise and that a reasonable compromise is available," said David Kelly, chief global strategist for J.P. Morgan Funds, in a note to clients.
A pair of strong corporate earnings reports also boosted Wall Street. Lowe’s said its third-quarter profit surged 76 percent. That’s after a strong report from Home Depot last week. Lowe’s rose $2.18, or 7 percent, to $34.13.
Tyson Foods, the country’s largest meat company, also beat Wall Street expectations. Its stock rose $1.18, or 7 percent, to $18.06.
Stocks fell sharply last week, marking their fourth week of declines, as traders fretted about the possibility that lawmakers will fail to prevent the package of spending cuts and tax increases known as the "fiscal cliff."
Stocks rebounded Friday afternoon, however, amid signs that President Barack Obama and Congress were prepared to cede some long-held bargaining positions. House Speaker John Boehner and Senate Minority Leader Mitch McConnell both said they offered higher tax revenue as part of a deal.
Volume was light on the first day of a holiday-shortened trading week. The market is closed on Thursday for Thanksgiving and will close early Friday.
Indexes in France, Germany and Britain were up by more than 1.5 percent as traders monitored Greece’s quest for its latest round of bailout cash. Greece needs international lenders and the International Monetary Fund to release the money so that Greece can meet upcoming payments to creditors.
Finance ministers from the nations that use the euro will meet Tuesday. Later in the week, leaders will convene to discuss the European Union’s budget for the next few years.
Traders also were following developments in the Middle East as conflict between Israel and Hamas flared. Concerns about instability in the region pushed oil up $1.09 to $88 a barrel in electronic trading on the New York Mercantile Exchange.
Rising crude prices lifted energy stocks, making them the best performers among the 10 industry groups in the S&P 500 index.
Earlier, Asian markets rose more modestly.
The yield on the benchmark 10-year Treasury note rose 1.62 percent from 1.58 percent late Friday, a sign that traders are selling low-risk investments. A bond’s yield rises as its price falls.