'Fiscal cliff' relief boosts markets
The "fiscal cliff" compromise, even with all its chaos, controversy and unresolved questions, was enough to ignite the stock market Wednesday, the first trading day of 2013.
The Dow Jones industrial average careened more than 300 points higher, its biggest gain since December 2011. It's now just 5 percent below its record high close of 14,164.53 reached in October 2007.
The reverie multiplied across the globe, with stock indexes throughout Europe and Asia leaping higher.
In the United States, the rally was extraordinarily broad. For every stock that fell on the New York Stock Exchange, roughly 10 rose. Technology stocks rose the most. U.S. government bond prices fell sharply as investors pulled money out of safe-harbor investments.
Despite the euphoria, many investors remained cautious. The deal that politicians hammered out merely postpones the country's budget reckoning, they said, rather than averting it.
"Nothing got solved," said T. Doug Dale, chief investment officer for Security Ballew Wealth Management in Jackson, Miss.
According to many market watchers, investors were celebrating Wednesday not because they love the budget deal that was cobbled together, but because they were grateful there was any deal at all.
"Most people think that no deal would have been worse than a bad deal," said Mark Lehmann, president of JMP Securities in San Francisco. But, he added, "There's definitely another drama coming down the road. That's the March cliff."
Even so, Wednesday's performance gave no hint of dark clouds on the horizon.