NEW YORK (Reuters) - Stocks rose in late morning trading Thursday on optimism that the Congress was progressing toward a budget agreement that would avert a possible recession, though trading was volatile as investors remained cautious.
There have been tentative signs that Congressional leaders are moving closer to a fiscal agreement. Indeed, investors' hopes for a pact have risen as Republican resolve against raising tax rates for the wealthy has weakened, and amid optimism by President Obama and top House Republican John Boehner that a fiscal crisis can be averted.
The S&P 500 has gained nearly 5 percent after dropping almost 8 percent following the U.S. election in November. But investors remain wary that ad hoc statements from policymakers can spark quick reversals in the market.
"When the sentiment is that nothing is going to get done, it does create a lot of anxiety and selling pressure. If there's any sense of progress, then the market seems to rally," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago. "I think we're hostage to this for the rest of the year."
U.S.-listed shares of BlackBerry maker Research In Motion
The Dow Jones industrial average <.dji> gained 44.62 points, or 0.34 percent, to 13,029.73. The Standard & Poor's 500 Index <.spx> rose 6.71 points, or 0.48 percent, to 1,416.64. The Nasdaq Composite Index <.ixic> added 20.87 points, or 0.70 percent, to 3,012.65.
Discussions are ongoing in Congress over avoiding big spending cuts and tax hikes, known as the "fiscal cliff," beginning in January. Indeed, equity markets may retreat, as they did Tuesday, if the upbeat negotiation environment in Washington deteriorates.
Top retailers said weak sales in early November, after superstorm Sandy, were a drag on the month. Target
The economy grew faster than initially thought in the third quarter as businesses restocked, but consumer and business spending were revised lower in a sobering reminder of the economic recovery's underlying weakness.
Gross domestic product expanded at a 2.7 percent annual rate in the quarter, the Commerce Department said, as export growth helped offset the weakest consumer spending and first drop in business investment in more than a year.
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Although domestic events largely dominated investors' attention, the euro zone is still on the radar. The yield on Italy's 10-year bonds fell to the lowest in two years at an auction, amid relief that international lenders reached agreement this week to reduce Greece's debt by more than 40 billion euros.
"The fact that the bond sales in Europe went well suggest confidence is beginning to reenter some of the peripheral nations and that is a good sign," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
(Editing by Bernadette Baum)
Wall Street advances on budget progress, mood cautious
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Wall Street advances on budget progress, mood cautious
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Wall Street advances on budget progress, mood cautious
