Stocks gain on budget talk optimism, Fed stimulus
NEW YORK (AP) — Stocks rose for a fifth straight day Tuesday as investors latched on to reports of progress in budget talks in Washington. The Standard & Poor's 500 index had its biggest gain this month.
The Dow Jones industrial average gained 78.56 points to 13,248.44. It was up as much as 137 points earlier in the day. The S&P 500 finished up 9.29 points at 1,427.84. The Nasdaq composite ended up 35.34 points at 3,022.30.
Delta Air Lines rose 52 cents, or 5.1 percent, to $10.66 after the company said it will buy almost half of Richard Branson's Virgin Atlantic for $360 million as it seeks a bigger share of the lucrative New York-to-London travel market.
AIG gained $1.90 to $35.26 after the U.S. Treasury Department said it has sold the rest of its stake in the insurer. AIG was bailed out by the government after nearly collapsing during the 2008 financial crisis.
The S&P and Nasdaq got a boost from Apple, which makes up 4 percent of the S&P and 11 percent of the Nasdaq. Apple isn't part of the Dow.
Apple advanced $11.57, or 2.2 percent, to $541.39, its biggest advance in more than a week. Apple had fallen sharply since closing at a record high of $702.10 on Sept. 19 as investors worried that the tech giant won't be able to maintain its rapid growth as competition in the smartphone market intensifies.
Stocks have edged up since the start of the month as investors watch for developments in the budget talks. Tax increases and federal spending cuts are scheduled to start Jan. 1 unless a deal is reached to reduce the U.S. budget deficit. Economists say the measures, if implemented, could eventually push the economy back into recession.
The S&P 500 fell as much as 5 percent after the U.S. presidential election Nov. 6 as investors worried that gridlock in Washington would prevent a budget deal. With Tuesday's advance, the S&P 500 has recouped almost all of the ground it lost since the election when it closed at 1,428.39.
The Wall Street Journal reported that budget negotiations between the White House and Republican House Speaker John Boehner had "progressed steadily" in recent days. That reinvigorated talks that appeared to have stalled, the paper reported, citing people close to the process.
Stock markets stayed higher even after Boehner said midday Tuesday that President Barack Obama is slow-walking talks to avoid the fiscal cliff, and hasn't outlined spending cuts he's willing to support as part of a compromise. Senate Majority Leader Harry Reid said Tuesday afternoon that it would be "extremely difficult" to pass legislation to address the so-called fiscal cliff before Christmas, but added there's still a chance it can be done.
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