U.S. stocks pared some of its initial gains but still firmly traded in green territory by midday trade on Wednesday after the lawmakers in Washington managed to cut a deal and averted the fiscal cliff. Investors’ sentiment has also been boosted by better than expected manufacturing data also boosted the risk appetite.
At last check, the Dow Jones Industrial Average Index was gaining 1.74; the Nasdaq Composite Index was up 2.29 the S&P 500 Index was 1.77%
The across-the-board rally comes after Wall Street stocks ended 2012 on a strong note. The DJIA gained nearly 7 percent, the NASDAQ Composite gained nearly 17 percent while the S&P 500 Index climbed 13.4 percent during the year.
All key S&P 500 sectors were in green territory with tech and financial stocks gaining the most.
After weeks of uncertainty caused by policy stalemate in Washington, global equities rallied on Wednesday after the U.S. Congress passed a deal which prevented series of dreaded automatic spending cuts and tax increases on majority of Americans. However, quite a few challenges do remain unresolved such as long-term spending cuts and debt ceiling issue, which are expected to spark heated rounds of debate among congressional leaders in next two months.
On U.S. economic data front, a data provided by the Institute of Supply Management (ISM) showed that manufacturing activities expanded in December. The Index stood at 50.7, beating analysts’ consensus estimate of 50.3.
According to the Commerce Department, construction spending slipped 0.3 percent in November. Economists were expecting spending to increase by 0.6 percent.
Despite Raymond James slashing its price target on the stock to $690 from $700, shares of Apple Inc. (NASDAQ: AAPL
) gained on Wednesday the news emerged that ipad manufacturer started testing hardware for iPad6.
Shares of Zipcar Inc. (NASDAQ: ZIP
) climbed over 50 percent after Avis Budget Group Inc. (NASDAQ: CAR
) agreed to acquire its smaller rival in an all cash deal of $500 million.
Elsewhere in Europe, all leading benchmark Indexes ended strongly with Pan European Stoxx 600 Index ending 2.02 % up.