* Tuesday vote to avert "fiscal cliff" bolsters stocks
* U.S. manufacturing sector expands in Dec-ISM
* Indexes up: S&P 2 pct, Dow 2 pct, Nasdaq 2.5 pct
By Angela Moon
NEW YORK, Jan 2 U.S. stocks surged on the first
trading day of 2013 after U.S. lawmakers agreed a deal to avoid
massive tax hikes and spending cuts that had threatened to hurt
The gains come after U.S. stocks ended 2012 with their
strongest day in more than a month, which put the S&P 500 up
13.4 percent for the year, after a flat performance in 2011.
Late on Tuesday, the House of Representatives voted for a
bill that will raise taxes on wealthy individuals and families
and preserve certain benefits.
The vote averted immediate austerity measures, like tax
hikes for almost all U.S. households, although it didn't resolve
other political showdowns on the budget due in coming months.
Spending cuts of $109 billion in military and domestic programs
were only delayed for two months.
"Many investors are feeling confident heading into 2013
following a year of strong equity market returns, and the
recently signed deal," said Jonathan Golub, strategist at UBS in
"Unfortunately, our sense is that the most important
structural issues will continue to be pushed off into the
future, leaving significant uncertainty about the long-term
direction of the economy and corporate profits."
The Dow Jones industrial average was up 255.72
points, or 1.95 percent, at 13,359.86. The Standard & Poor's 500
Index was up 28.75 points, or 2.02 percent, at 1,454.94.
The Nasdaq Composite Index was up 75.18 points, or 2.49
percent, at 3,094.70.
Bank shares rose following news that U.S. regulators are
close to securing another multibillion-dollar settlement with
the largest banks to resolve allegations that they unlawfully
cut corners when foreclosing on delinquent borrowers.
Bank of America Corp rose 4 percent to $12.06 and
Wells Fargo shares added 2.4 percent to $35. JPMorgan
Chase & Co shares rose 3 percent to $44.96.
Boosting the technology sector, Apple shares rose on a
report that the most valuable technology company has started
testing a new iPhone and the next version of its iOS
software. The stock was up 3.9 percent at
Shares of Zipcar Inc jumped 48 percent to $12.21
after Avis Budget Group Inc said it would buy Zipcar for
about $500 million in cash to compete with larger rivals Hertz
and Enterprise Holdings Inc.
On the macroeconomic front, U.S. manufacturing expanded
slightly in December, rebounding from an unexpected contraction
the prior month, an industry report showed on Wednesday.
A separate report showed U.S. construction spending fell in
November for the first time in eight months, as an extended bout
of weakness in the business sector outweighed modest growth in
outlays on residential projects. The equity
market's reaction to both reports was muted.
On the last day of trading in 2012, the Dow Jones industrial
average gained 166.03 points, or 1.28 percent, to close
at 13,104.14. The Standard & Poor's 500 Index gained
23.76 points, or 1.69 percent, to finish at 1,426.19. The Nasdaq
Composite Index gained 59.20 points, or 2.00 percent, to
close at 3,019.51.
In 2012, the Dow advanced 7.3 percent, while the Nasdaq
climbed 15.9 percent.