On Wall Street, stock prices rose sharply on Monday as investors were encouraged by a good start to negotiations on the U.S. budget, hoping to avoid the ‘fiscal cliff’.
The Dow Jones index strengthened by 207 points, or 1.65 percent, to 12,795 points, while the S&P 500 jumped 1.99 percent to 1,386 points, and the Nasdaq index rose 2.21 percent to 2,916 points. Stock prices on Wall Street increased for the second consecutive day as encouraging comments from both Republicans and Democrats, who indicated they are ready to compromise, followed the first meeting on budget issues held at the White House on Friday.
Therefore, investors hope that an agreement on the budget will be reached in Congress by the end of the year to avoid the ‘fiscal cliff’, automatic cuts in budget expenditures, and tax increases that could push the U.S. economy into recession.
– Everyone breathed a sigh of relief because the atmosphere in which the negotiations began is positive. Therefore, we are no longer looking down the cliff, but we have been given the opportunity to step back from it and take a breather – says Peter Kenny, director at Knight Capital. However, the jump in stock prices could be temporary, as the direction of the market largely depends on the further development of negotiations, including the increase in capital gains and dividend taxes.
