* Tuesday vote to avert "fiscal cliff" prompts stocks' rally
* Bank shares rise as settlement nears
* Zipcar jumps on news of Avis Budget acquisition
* Dow up 1.7 pct, S&P 500 up 1.7 pct, Nasdaq up 2.2 pct
By Gabriel Debenedetti
NEW YORK, Jan 2 U.S. stocks soared on the first
day of trading in 2013, after Washington lawmakers cut a
last-minute deal to avoid automatic tax hikes that threatened to
pinch economic growth.
The rally was broad-based, with 10 stocks rising for every
one falling on the New York Stock Exchange. All 10 S&P 500
industry sector indexes rose at least 1 percent, led by the S&P
information technology index, up 2.2 percent.
Among the strongest names in the sector was Hewlett-Packard
, which rose 5.3 percent to $15 after a miserable 2012
when the stock fell nearly 45 percent.
Congress passed a bill to raise taxes on wealthy individuals
and families, and preserve certain benefits, while averting
immediate austerity measures. The combination of mandatory tax
hikes and reduced federal spending, which had been set to go
into effect on Jan. 1, had been known as the "fiscal cliff."
" We had three choices: We were going to be off the cliff, we
were going to be on the cliff, or we were going to avoid the
cliff, and we avoided it," said Brian Battle, director of
trading at Performance Trust Capital Partners in Chicago.
"There's a relief rally, some progress because we raised
revenue, but I think it's going to be short-lived because the
relief rally today was created by politics, and the next cliff
is going to be created by politics."
The vote avoided tax hikes for all U.S. households, but
failed to resolve other political budget showdowns. Spending
cuts of $109 billion in military and domestic programs were only
delayed for two months, and another fight over the U.S. debt
limit looms at that time as well.
U.S. stocks ended 2012 with the S&P 500 up 13.4 percent for
the year, as investors largely shrugged off worries about the
The Dow Jones industrial average shot up 217.08
points, or 1.66 percent, to 13,321.22. The Standard & Poor's 500
Index rose 23.60 points, or 1.65 percent, to 1,449.79.
The Nasdaq Composite Index gained 65.56 points, or 2.17
percent, to 3,085.07.
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 3.5 percent to $12 and
Wells Fargo shares added 2 percent to $34.87. JPMorgan
Chase & Co shares rose 1.4 percent to $44.28.
Shares of Apple rose 2.3 percent to $544.45,
boosting technology stocks, following a report that the most
valuable tech company has started testing a new iPhone and a new
version of its iOS software.
Shares of Zipcar Inc jumped 48.5 percent to $12.24
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. Avis rose 4.9 percent to
U.S. manufacturing expanded slightly in December after an
unexpected November contraction, an Institute for Supply
Management report showed on Wednesday.
A Commerce Department 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 stock market's reaction to both reports was muted.