NEW YORK (AP) — The stock market showed signs of life Tuesday following hopeful signs of progress in budget talks being held in Washington.
The Dow gained 73 points to 13,243 as of 3:04 p.m. in New York, after climbing as much as 137 points earlier. The Dow posted modest increases over the previous four days. The Standard & Poor's 500 was up eight points at 1,428. The Nasdaq composite was up 31 points at 3,028.
Delta Air Lines rose 61 cents to $10.74 after the company said it will buy almost half of Richard Branson's Virgin Atlantic for $360 million as it seeks a bigger share of the lucrative New York-to-London travel market.
AIG gained $1.46 to $34.81 after the U.S. Treasury Department said it has sold the rest of its stake in the insurer. AIG was bailed out by the government after nearly collapsing during the 2008 financial crisis.
Stocks have edged up since the start of the month as investors watch for developments in the budget talks. Tax increases and federal spending cuts are scheduled to start Jan. 1 unless a deal is reached to reduce the U.S. budget deficit. Economists say the measures, if implemented, could eventually push the economy back into recession.
The S&P 500 fell as much as 5 percent after the U.S. presidential election Nov. 6 as investors worried that gridlock in Washington would prevent a budget deal. With Tuesday's advance, the S&P 500 has recouped almost all of the ground it lost since the election.
The Wall Street Journal reported that budget negotiations between the White House and Republican House Speaker John Boehner had "progressed steadily" in recent days. That reinvigorated talks that appeared to have stalled, the paper reported, citing people close to the process.
Stock markets stayed higher even after Boehner said midday Tuesday that President Barack Obama is slow-walking talks to avoid the fiscal cliff, and hasn't outlined spending cuts he's willing to support as part of a compromise.
"The market has been very susceptible to 'fiscal cliff' headlines," said Todd Salamone, a senior vice president at Schaeffers Investment Research, adding that stocks have rallied more on good news, than they have fallen on indications that talks were stalling. "It seems the expectation is that something will get done, but it's a very cautious expectation. There's a lot of money on the sidelines."
Trading volume on the New York Stock Exchange was below average.
Stocks are holding on to their gains for the year. The Dow Jones is up 8.4 percent since the start of the year, while the S&P 500 has gained 13.5 percent.
The Federal Reserve is expected this week to announce a new bond-buying plan to support the U.S. economy with the goal of further reducing long-term interest rates and encouraging borrowing by companies and individuals. Once its two-day policy meeting ends Wednesday, the Fed is likely to say it will start buying more long-term Treasurys to replace a program that expires at year's end. Continued...