All three major US stock indexes erased losses after comments by Republican House Speaker John Boehner discusses with Obama ways to avert sharp tax increases and spending cuts that would take effect next year.
US stocks rose on Friday after Republicans said their meeting with Democratic President Barack Obama about the "fiscal cliff" was constructive and that they were prepared to put higher revenue on the table if there were also significant spending cuts.
All three major US stock indexes erased losses to turn higher following comments by Republican House Speaker John Boehner and others who discussed with Obama ways to avert sharp tax increases and spending cuts that would take effect next year. Analysts have said the fiscal cliff could tip the economy into recession.
"To show our seriousness, we've put revenue on the table as long as it's accompanied by significant spending cuts," Boehner told reporters at the White House. Republican Senate Minority Leader Mitch McConnell also offered conditional backing for new revenue but said reforms to social safety net programs are also necessary. "I would call this a PR stunt, but just the fact that people are reacting to it this positively shows that the market is oversold and is seeking a reason to rally," said James Dailey, portfolio manager at TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
"If we fail to hold onto (gains) and hit new lows later today, then that will definitely be very alarming." The Dow Jones industrial average was up 40.13 points, or 0.32%, at 12,582.51. The Standard & Poor's 500 Index was up 4.76 points, or 0.35%, at 1,358.09. The Nasdaq Composite Index was up 10.09 points, or 0.36%, at 2,847.02. The S&P is down 4.3% over the past two weeks, with such sectors as financials and materials among the hardest hit.
The S&P and the Dow are currently down about 1.5% for the week while the Nasdaq is down about 2.2%. Dell Inc's stock slumped 7.8% to $8.81 and was the biggest percentage decliner on the S&P 500 a day after reporting a steep drop in its quarterly profit. Shares of Penn National Gaming Inc jumped 30% to $48.65 after the owner of gaming and pari-mutuel properties said late Thursday it will split its business into two separate publicly traded companies — a gaming focused real estate investment trust and a gaming operator.
Sears Holdings Corp late Thursday reported a quarterly loss that was narrower than expected, but same-store sales fell on weak demand for electronics, sending shares down 16.7% to $48.72. JM Smucker Co reported a rise in second-quarter earnings, helped by a drop in commodity costs, but the stock fell 2.9% to $82.94.
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