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Pre-Market Primer: Stocks Rise on Fiscal Cliff Optimism

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Italian and Spanish bonds also rallied.

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MINYANVILLE ORIGINAL Hopes that US lawmakers will reach an agreement on budgets sent stocks to a three-week high today.

Initial claims for unemployment insurance, which were especially high for the two weeks prior due to Hurricane Sandy, fell to 393,000 last week from the previous week's upwardly-revised 416,000. Economists expected 3,000 fewer claims. The Federal Reserve confirmed that the US economy grew by 2.7% last quarter. Though this was 0.1% less than expected, this figure came in line with expectations.

Later this morning, the government will release pending home sales data for October. Economists expect the index to rise 1.0%.

After a strong rally yesterday, Dow (INDEXDJX:.DJI) futures are up 0.56% at 13,030.00. S&P 500 (INDEXSP:.INX) futures rose 0.61% to 1,415.70, and Nasdaq (INDEXNASDAQ:.IXIC) futures climbed 0.70% to 2,679.25.

Treasury Secretary Timothy Geithner will meet with Congressional leaders to work on building a consensus to avoid the fiscal cliff. Yesterday, House Speaker John Boehner said he is optimistic that the two branches of government will resolve the issue "sooner rather than later." President Barack Obama said that he wants to resolve the issue "in a bipartisan fashion" before Christmas.

Italian and Spanish 10-year bond yields dropped today. Italy sold 2.9 billion euros of 10-year debt at an auction today. The country's borrowing costs fell to 4.45%, the lowest level in two years. At a similar auction last month, the rate was 4.92%. Italy also sold 3 billion euros of 5-year bonds at 3.23%. Spanish bond yields fell 13 basis points to 5.2%, the lowest rate since March.

Tiffany (NYSE:TIF) shares fell more than 8% after the company reported lower-than-expected earnings and revenue.

Dell (NASDAQ:DELL) is mulling an investment in Sharp Corp. (PINK:SHCAY), the struggling Japanese electronics company. Intel (NASDAQ:INTC) and Qualcomm (NASDAQ:QCOM) are also considering taking a stake in Sharp.

Retail sales in Japan fell 1.2% in October, the most in 11 months. The government will announce another fiscal stimulus tomorrow. The opposition, which is expected to win the elections next month, called for unlimited monetary easing from the Bank of Japan until inflation finally increases to 2%.

Twitter: @vincent_trivett
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
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