Stocks surge after last-minute budget deal reached
Stocks are soaring after lawmakers reached a deal that prevents across-the-board tax increases and cuts in domestic programs.
The Dow Jones industrial average jumped 232 points to 13,336 shortly after the opening bell Tuesday, the first trading day of 2013. That's a gain of 1.8 percent. The Standard & Poor's 500 index shot up 29 points, or 2 percent, to 1,455. The Nasdaq composite rose 82 points, or 2.7 percent, to 3,102.
Investors have been keeping a close eye on the budget stalemate in Washington and were relieved that a deal was reached. However the late-night budget agreement leaves many issues unresolved and it remained unclear how long the market rally would last. Next up is a fight over the government's borrowing limit.
Lawmakers left Capitol Hill after finally avoiding the fiscal cliff. 257 Democrats and Republicans voted for a bill that:
extends unemployment and middle class tax breaks;
keeps the alternative minimum tax from hitting working families;
avoids a big cut in Medicare payments to doctors;
and prevents tax hikes for 98 percent of Americans.
Tax rates will go up for couples making over $450,000. Democrats gave in on that.
Republicans won a victory by raising the estate tax threshold to over $5 million.
But that two percent payroll tax cut is gone. Expect to see that hit your paycheck starting this month.
"Tax relief has been achieved now is time for president to work with Congress to address government over spending," said Rep. Ed Royce (R-CA).
Before leaving for Hawaii early Wednesday, President Obama urged Congress to raise the debt ceiling.
"We can't not pay bills that we've already incurred. Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic," the president said.
There's no word on when the president will sign the bill. After Congress passed the bill last night, Obama left for Hawaii to complete his holiday break. Obama can sign the bill remotely using a machine called an "autopen," or the bill can be flown to Hawaii for his signature.
Democrats — Carson, Y; Donnelly, Y; Visclosky, N.
Republicans — Bucshon, N; Burton, X; Pence, N; Rokita, N; Stutzman, N; Young, N.