Photo: acme / Flickr
What a great way to start the year.First the scoreboard:
Dow: 13,412, +308.4, +2.3 per cent
S&P 500: 1,462, +36.2, +2.5 per cent
NASDAQ: 3,112, +92.7, +3.0 per cent
And now the top stories:
- So, we finally got a fiscal cliff deal. Congress worked through the wee hours of New Year’s Eve into the crack of New Year’s Day. And last night, the House approved the deal, which among other things raises tax rates on individuals earning more than $400k and households earning more than $450.
- There’s little doubt that the deal was behind the huge rally in the markets. However, there was also some strong economic data to reinforce optimism in the U.S. economy.
- The U.S. manufacturing purchasing managers index (PMI) jumped to 54.0 in December, according to Markit. This was up from 52.8 in November. Economists were looking for a reading of 53.6. “Firms are also taking on more staff, suggesting that the underlying improvement in demand pushed any worries about the ‘fiscal cliff’ to backs of manufacturers’ minds in the closing weeks of the year,” said Markit Chief Economist Chris Williamson.
- The ISM Manufacturing index, which offers a similar glimpse into the U.S. manufacturing sector, also surprised to the upside. The headline number grew to 50.7 from 49.5 in November. Economists were looking for a reading of 50.4. From the report: “The Employment Index registered 52.7 per cent, an increase of 4.3 percentage points, indicating a resumption of growth in employment following only one month of contraction since September 2009. Both the Exports and Imports Indexes registered 51.5 per cent, returning both indexes to growth territory following consecutive periods of contraction of six and four months, respectively.”
- Now that we have some fiscal cliff clarity, Wall Street is ratcheting up their forecasts for the S&P 500. In a new note to clients, Deutsche Bank’s David Bianco boosted his year-end target to 1,575 from 1,500.
- One big area of weakness today was natural gas, which plunged by over 4 per cent. New forecasts for a warm winter don’t bode well for the heating commodity.
- Don’t Miss: Investing Legend Byron Wien Reveals 10 Surprise Predictions For 2013 >