US markets rise on new hope of fiscal cliff deal

Ben Southwood
Follow Ben
US STOCK markets climbed upwards yesterday evening as hopes for a fiscal cliff deal rose.

The Dow Jones Industrial Average was up 100.38 at 13,235.39, a rise of 0.76 per cent, while the S&P 500 was up 1.19 per cent and Nasdaq rose 1.32 per cent, after President Barack Obama and congressional Republican leader John Boehner shared a 45-minute meeting.

Their goal in the meeting was to hammer out a package of policies to avoid some of the tax hikes and spending cuts, known together as the fiscal cliff, and aides from both parties said they thought a deal could be reached in coming days.

Together worth around 4.9 per cent of GDP, the automatic cuts and tax rises are set to hit the world’s biggest economy at the beginning of 2013. Many economists think that such a big fiscal consolidation pill would shock the US economy into recession if taken all in one dose.

On Saturday evening Boehner made a significant compromise by offering to let taxes on earnings above $1m (£617,000) return to their Clinton-era rates while keeping all other tax cuts. But Obama wants taxes to go up on all earnings above $250,000.