NEW YORK: U.S. stocks rallied on Monday, cementing yearly gains as Wall Street embraced emerging details of a budget deal that reportedly will have tax cuts extended for most households.
“Despite Washington, D.C.’s best effort to derail the economy, at this point it looks like the economy will continue in this subpar growth trajectory that we’re in,” said Ron Florance, managing director of investment strategy at Wells Fargo Private Bank.
“A deal stopping the tax increase does reduce meaningfully the prospect of recession in the beginning of 2013,” he added.
At a Monday afternoon news conference, President Barack Obama said an accord to avoid the cliff was within sight, but not yet complete.
Senate Republican leader Mitch McConnell later said an agreement had been reached on the tax issues of the deal.
Up 7.3 percent on the year, the Dow Jones industrial average on Monday climbed 166 points, or 1.3 percent, to 13,104.14.
The S&P 500 index added 23.76 points, or 1.7 percent, to 1,426.19, positioning it for a 13 percent yearly rise.
The Nasdaq composite climbed 59.20 points, or 2 percent, to 3,019.51, up almost 16 percent from the end of 2011.
Shares of Facebook Inc. rose 2.7 percent after the Bank of Montreal raised its rating on the social-networking company to “outperform” from “underperform.”
Meanwhile, oil prices rose. Benchmark U.S. crude rose $1.02 to finish at $91.82 per barrel in New York.
Oil has wavered in recent weeks along with the ups and downs of the budget negotiations. The price of oil finished December up about 3 percent from the start of the month. It ranged from a low near $77 a barrel to high around $110 a barrel during the year.
Brent crude, used to price international varieties of oil, rose 49 cents to end at $111.11 a barrel.
The national average for gasoline was at $3.29 per gallon Monday, well under the average of nearly $3.40 a month ago but 2 cents higher than a year ago.
In other energy futures trading:
• Natural gas fell 12 cents, or 3.4 percent, to finish at $3.35 per 1,000 cubic feet.
• Wholesale gasoline rose 1 cent to $2.81 a gallon.
• Heating oil was flat at $3.05 a gallon.
Gold prices edged higher, capping a 12th consecutive year of gains. February gold rose $19.90, or 1.2 percent, to $1,675.80 an ounce. Gold gained almost 7 percent in 2012 after starting the year at $1,566.80.
In other metals trading, copper advanced 6.3 cents, or 1.8 percent, to $3.6525 a pound, after a report showed that Chinese manufacturing hit a 19-month high in December.