NEW YORK (AP) — In a story Dec. 5 about the stock market, The Associated Press misspelled the last name of a market strategist at Prudential Financial. Her name is Quincy Krosby, not Quincy Crosby.
A corrected version of the story is below:
Stocks gain on "cliff" hope, led by banks
Stocks close higher, led by banks and other financial companies, on "fiscal cliff" optimism
By STEVE ROTHWELL
AP Business Writer
NEW YORK (AP) — Stocks closed higher Wednesday, their first gain of the week, as bank shares rose and comments by President Barack Obama made investors optimistic that a quick deal could be made to avoid the "fiscal cliff."
The Dow Jones industrial average rose 82.71 points to end at 13,034.49. It had been up as much as 137. The Standard and Poor's 500 closed up 2.23 points to 1,409.28. The Nasdaq composite was down 22.99 points to 2,973.70, held back by a slump in Apple.
Citigroup jumped $2.17, or 6.3 percent, to $36.46 after the bank said it plans to eliminate more than 11,000 jobs, or about 4 percent of its workforce, to cut expenses and improve efficiency. Travelers surged $3.47, or 4.9 percent, to $74 after it announced plans to resume stock buybacks. Travelers temporarily suspended repurchases following Superstorm Sandy while it assessed its exposure to damage claims.
"We can probably solve this in about a week, it's not that tough," Obama said in lunchtime remarks to the Business Roundtable in Washington. The comments, made just before noon, helped push the market higher, said Quincy Krosby, a market strategist at Prudential Financial.
Stocks have largely traded sideways for two weeks as investors wait for developments from Washington on crucial budget talks to avoid the "fiscal cliff," a series of sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit. Economists say that the measures, if implemented, could push the U.S. back into recession.
Apple was among the decliners, falling $37.05, or 6.4 percent, to $538.79. Stifel Financial analyst Aaron Rakers said the drop was in part due to comments from AT&T Mobility chief executive officer Ralph de La Vega, which suggested that smartphone activations this quarter were lagging the same period a year ago. The stock has now dropped 23 percent since closing at a record $702.10 in September.
Stocks are still up on the year, after the Federal Reserve extended its bond-buying program in September, offsetting concern that the European debt crisis was set to spread. The Dow has gained 7 percent and S&P 500 has advanced 12 percent.
"The market will hold on to its gains for the year. Given the uncertainty I don't see any compelling reasons for an increase," said Brian Gendreau, a market strategist with Cetera Financial Group, a Los Angeles-based broker. "But that could change in a blink. If there's better-than-expected news from these negotiations, the market could pop."
A Chinese government pledge to maintain policies intended to strengthen the world's second-largest economy helped raise optimism about global growth. China's Shanghai Composite Index jumped 2.9 percent to 2,031.91. Hong Kong's Hang Seng ended 2.2 percent higher at 22,270.91.
A private survey showed Wednesday that U.S. businesses added fewer workers in November, in part because Superstorm Sandy shut down factories, retail stores, and other companies. Payroll processor ADP said employers added 118,000 jobs last month. That's below October's total of 157,000, which was revised lower. Investors will also look to the monthly jobs report from the Labor Department Friday for more information about how the economy is doing.
Orders to U.S. factories rose modestly in October, helped by a big gain in demand for equipment that reflects business investment plans. Factory orders edged up 0.8 percent in October, the Commerce Department said Wednesday. That followed a 4.5 percent jump in September.
The yield on the 10-year Treasury note fell 1 basis points to 1.59 percent.
Among other stocks making big moves:
—Freeport-McMoRan Copper & Gold plunged $6.12, or 16 percent, to $32.16 after the mining company said it is buying oil companies Plains Exploration & Production and McMoRan Exploration for about $9 billion.
—Mattress Firm Holding Corp. fell $6.65, or 22 percent, to $23.67 after the mattress retailer said late Tuesday that sales trends were softening.
—Pandora Media, an internet radio company, fell $1.65, or 17.5 percent, to $7.80 after saying it would make a much larger loss in the fourth quarter than analysts had been forecasting.