NEW YORK--US stocks advanced, snapping a two-day drop in the Standard & Poor’s 500 Index, as investors weighed prospects for a budget deal in Washington.
The S&P 500 added 0.3 percent to 1,417.380 at 9:31 a.m. in New York. The equity benchmark has lost 1.6 percent so far this quarter, the worst performance among 24 developed markets, as President Barack Obama and House Republicans differed over how to avoid automatic deficit-reduction measures.
“It’s the fiscal cliff that’s dominating,” said Jacques Porta, who helps manage US$627 million at Ofi Patrimoine in Paris. “We don’t yet have a definitive agreement, but things are taking shape.”
Obama and House Speaker John Boehner haven’t reached a deal with two weeks remaining to avert more than $600 billion in automatic spending cuts and tax increases, known as the fiscal cliff, set to start in January. The Congressional Budget Office has said a failure to prevent those changes may lead to a recession in the first half of 2013.
Republicans and Democrats in Congress are starting to talk about the benefits of waiting until January to reach a budget deal. Obama rejected an offer by Boehner to raise rates on household income above $1 million a year in exchange for containing entitlement program costs.
Manufacturing in the New York region shrank more than forecast in December, showing weakness in the industry is persisting as the year draws to a close.
In Japan, the Nikkei 225 Stock Average rose to the highest in eight months after the Liberal Democratic Party returned to power on a campaign for more economic stimulus and the doubling of the nation’s inflation goal. (Bloomberg/tw)
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