Wednesday, January 2, 2013
U.S. stocks rallied sharply to begin 2013 as the "kick the can" moment was finalized by Congress Tuesday, pushing off uncertainty for at least a few more weeks. While both the sequester and the debt ceiling loom in just over a month, the markets were only worried about today. The S&P 500 gained 2.5% and the NASDAQ 3.1%. Moody's Investors Service said in a statement that the budget deal passed by Congress "does not...provide a meaningful improvement in the government's debt ratios over the medium term
," reminding investors of the risks still hovering over markets. Moody's, which has put its top-notch rating of the U.S. government on a negative outlook, said the negotiations would likely affect its next ratings action.
In economic news:
- The Institute for Supply Management’s U.S. factory index rose to 50.7 in December from 49.5 a month earlier. Economists projected a reading of 50.5 for December. The dividing line between expansion and contraction is 50.
- Construction spending slipped 0.3% in November, versus expectations for a 0.7% monthly rise.
Oil gained 1.4% to $93.12, gold added 0.8% to $1688.80, and silver rallied 2.6% to $31.01.
British and German shares both gained 2.2%, while French shares rallied 2.55%.
- The euro zone's manufacturing purchasing managers index slipped to 46.1 in December, indicating further contraction. Meanwhile, the U.K.'s manufacturing PMI rose to 51.4, which indicates expansion.
China and Japan remained closed for holidays.