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U.S. stocks rise on hopes for budget deal, Europe
Materials stocks, a category that includes foresting companies, metal producers and miners, soared, supported by the latest sign that a recovery in the housing market has stabilized.
The National Association of Realtors said sales of previously occupied homes in the U.S. rose in October, helped by a stronger job market and record-low mortgage rates. The pace of sales is roughly 11 percent higher than a year ago.
Stocks fell in each of the past four weeks as traders fretted about the possibility that lawmakers will fail to prevent the spending cuts and tax increases from taking effect.
Economists have warned that the hit to the economy could total $700 billion for 2013 and push the United States back into recession, although the damage from the “cliff” would come slowly, and lawmakers could always reach a deal after Jan. 1.
House Speaker John Boehner and Senate Minority Leader Mitch McConnell said they had offered higher tax revenue as part of a deal. That could include limiting tax deductions for the highest earners.
Monday’s gain for the Dow was its biggest since Sept. 13.
The S&P 500, meanwhile, is trading near a key technical level, said Randy Frederick, managing director of active trading and derivatives at the brokerage Charles Schwab.
For nearly two weeks, the index has closed below its 200-day average, which on Monday stood at 1,382. It surpassed that marker Monday afternoon. Frederick said that might signal more buying.
Technical levels are historic averages and other indicators used by some traders to decide if stocks are a good value.
The market is closed on Thursday for Thanksgiving and will close early Friday.
On Monday, stock indexes in France, Germany and Britain closed up 2.5 percent or more 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. Trading in Europe is still volatile. The region has entered recession.
Finance ministers from 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 followed developments in the Middle East as conflict flared between Israel and Hamas. Concerns about instability in the region and hopes for a U.S. fiscal pact pushed benchmark crude up $2.36, or 2.7 percent, to finish at $89.28 per barrel in New York.
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