A trader on the floor of the New York Stock Exchange Dec. 17, 2012.(Photo: Andrew Burton Getty Images)
NEW YORK -- Stocks moved up a bit Tuesday on signs that the White House and Congress are moving closer to a budget deal.
new proposal softens President Obama's long-held insistence that taxes
rise on individuals earning more than $200,000 and families making more
than $250,000. He is now offering a new threshold of $400,000 and
lowering his 10-year tax revenue goals.
The laser-like focus of
Wall Street - which is betting that there will be a deal to prevent tax
hikes and government spending cuts that could cause another recession -
has started to exclude lower-ranking negotiators from each side.
most recent meetings between Obama and House Speaker John Boehner,
including a 45-minute White House powwow Monday, are raising hopes a
handshake could be in the offing.
Investors' optimism pushed the
Dow Jones industrial average 100 points higher Monday to end above
13,235. The perception of progress in the negotiations and that a deal
will happen before the cliff's edge has boosted the Dow some 4% the past
Signs of progress emerged Monday
after Boehner reportedly pulled back from saying he would never approve
higher taxes for the wealthy to being willing to OK a tax hike on those
earning $1 million or more a year.
"Investors are watching Obama
and Boehner the way they watch and weigh every word from Federal
Reserve Chairman Ben Bernanke on Fed (policy-making) meeting days," says
JJ Kinahan, chief derivatives strategist at brokerage TD Ameritrade.
"That will continue until we have a deal or fall off the cliff."
investors though, there's a crucial difference between Obama and
Boehner forging a deal and the Fed deciding to change its interest-rate
"You know what time Bernanke is going to announce his
policy moves," he says. "But Obama and Boehner can make an announcement
at any time of the day. That makes it treacherous."