Stocks rallied in early trading on Wednesday as market sentiment, which remained on tenterhooks for last two months in the backdrop of policy logjam in Washington due to issue of tax increases and spending cuts, was boosted immensely after lawmakers finally cleared the bill that averts the fiscal cliff even as some other budget issues such as long-term spending cuts remain unresolved.
At last check, the Dow Jones Industrial Average Index climbed 2.02%; the Nasdaq Composite Index leaped 2.75% while the S&P 500 Index jumped 2.19%
Late on Tuesday night, the House of Representatives, dominated by Republicans, cleared the bill, which would raise taxes on individuals having an annual income above $400,000 or $450,000 for couples to 39.6 percent from 35 percent, a demand made by President Obama ever since he started his reelection campaign. The bill now needs President Obama’s sign in order to become a law.
Meanwhile hosts of other issues such as long-term spending cuts, and debt ceiling limit (which is technically over but accounting adjustment has enabled the government to continue with its normal functions for two more months), will keep investors slightly edgy in coming weeks.
In some corporate news, shares of Zipcar Inc. (NASDAQ: ZIP
) rallied after larger rival Avis Budget Group Inc. (NASDAQ: CAR
) announced that it agreed to acquire Zipcar in an all cash deal, valued at $500 million or $12.5 per share, representing a premium of 49 percent on ZIP’s closing value on December 31st
Shares of social networking giant, Facebook Inc. (NASDAQ: FB
) gained after JP Morgan boosted its price target on FB stock to $35 from $29
Elsewhere in Europe, the Pan European Stoxx 600 was gaining 2.01% Index, FTSE 100 was up 2.38%, Germany’s DAX was climbing 2.03% while Spain’s Ibex 35 jumping 1.95%