US stocks were up sharply at the start of the holiday-shortened trading week on renewed optimism that a deal to avert the fiscal cliff could be brokered in time. Strong housing data also bolstered investors’ confidence.
“Attention remains centered on the fiscal cliff," Michala Marcussen, global head of economics at Societe Generale, told The Street
. "Recent developments give grounds for some cautious optimism, but history suggests that politics can be notoriously fickle. Our base case remains that a temporary extension is voted before year-end with a final agreement in early 2013. This will lift uncertainty and remove a significant headwind to recovery."
Meanwhile, existing home sales rose 2.1% to a seasonally adjusted annual rate of 4.79 million in October in spite of Hurricane Sandy, exceeding economists’ expectations of 4.75 million. The National Association of Home Builders' housing market index, which measures confidence about the housing market and the economy, also improved to 46, when the consensus was an unchanged level of 41.
The Dow Jones Industrial Average
(INDEXDJX:.DJI) was up 1.37% to 12,760.41 points as of 12:07 p.m. EST. All 30 Dow components were in the green in intraday trading.
Bank of America
(NYSE:BAC) led a surge of Dow financials, jumping 3.84% to $9.47. The stock was upgraded to Buy by Stifel Nicolaus, who also raised the price target to $11.
“We like the combination of the company’s potential EPS growth trajectory, its improved capital position and likely dividend increase, leverage to what is working in the current environment (mortgage origination and debt underwriting) and our belief that it is under-owned. These traits make BAC shares a relatively attractive place to be in a sector struggling for catalysts,” said Stifel in a note.
(NYSE:JPM) (+2.58%), American Express
(NYSE:AXP) (+1.57%), and Travelers
(NYSE:TRV) (+1.12%) were all up on the day. The bellwether Financial Select Sector SPDR ETF (
NYSEARCA:XLF), which tracks all financial stocks in the S&P 500, was up 1.93% to $15.57 .
After a week of declines, telecommunications stocks also recovered. Verizon
(NYSE:VZ) (+2.75%), AT&T
(NYSE:T) (+2.19%), and Sprint
(NYSE:S) (+1.46%) all posted gains.
(NYSE:CAT) (+1.95%) and General Electric
(NYSE:GE) (+2.19%), stocks that are especially sensitive to macroeonomic developments, also rebounded strongly.
No positions in stocks mentioned.
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