The Dow Jones industrial average gained 207.65 points, or 1.65 per cent, at 12,795.96. The Standard & Poor’s 500 Index was up 27.01 points, or 1.99 per cent, at 1,386.89. The Nasdaq Composite Index was up 62.94 points, or 2.21 per cent, at 2,916.07.
Stronger-than-expected earnings from Lowe’s and Tyson Foods, as well as encouraging housing data, also contributed to the market’s advance. Tyson and Lowe’s were the top two percentage gainers on the S&P 500.
The S&P 500 is up more than two per cent in the last two sessions as rhetoric from legislators over the weekend suggests a deal could be reached to stave off the looming “fiscal cliff”, a series of tax and spending changes that will begin to take effect in the new year. The two sides are still far apart in negotiations, however.
The benchmark S&P index had fallen 5.3 per cent between Election Day and Friday’s rebound, as investors took the opportunity to sell stocks – including some of the year’s best performers – just in case Washington can not come to an agreement and taxes on dividends and capital gains rise in 2013.
“Everyone is quietly breathing a sigh of relief, because frankly, we are no longer looking over the edge of a cliff, we are looking at an opportunity to step back and recalibrate,” said Peter Kenny of Knight Capital.
However, the rebound could be a short-lived reprieve from the sharp declines and market volatility could still rise, depending on negotiations.