By Kate Gibson and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) — U.S. stock-market futures moved sharply higher Wednesday, as the first trading day of the year kicked off with welcome news of Washington lawmakers’ last-minute move to avert the fiscal cliff.
“We are happy to be halfway home to fixing the fiscal cliff; we figured out the revenue side and delayed the spending side,” said Art Hogan, managing director, head of product strategy at Lazard Capital Markets.
Data on tap for Wednesday include a nationwide survey of manufacturers and the latest figures on construction spending.
Futures for the Dow Jones Industrial Average /quotes/zigman/9025253 DJH3 -0.15% jumped 215 points, or 1.6%, to 13,241. Those for the Standard & Poor’s 500 index /quotes/zigman/4371397 SPH3 -0.24% rose 26.70, or 1.9%, to 1,446.80.
Futures for the Nasdaq-100 index /quotes/zigman/8751120 NDH3 -0.05% rose 59 points, or 2.2%, to 2,714.25.
Wall Street was expected to rally on the heels of similar activity overseas, with Europe and Asia stocks sharply higher after the House of Representatives voted late Tuesday to pass a bipartisan deal that averts the fiscal cliff of austerity measures. President Barack Obama says he’ll sign the bill into law. Read: Fiscal-cliff deal passes Congress
The market reaction is expected to be upbeat, at least initially. “At the start of trading we’ll see a positive reaction…but as we progress toward the latter parts of the week, the excitement will evaporate, because the buildup doesn't include raising the debt ceiling or longer-term budget cuts,” said Fawad Razaqzada, technical strategist at GFT Markets. The Tell: Strategists expect Wall Street to rally after budget deal, but say it won't last
Markets welcome fiscal-cliff deal
The Senate and the House of Representatives both approve a bipartisan deal to block most impending tax increases and postpone spending cuts. What the deal means for the U.S. deficit.
“The focus will quickly shift toward the end of February when the U.S. is expected to hit its debt ceiling,” said Razaqzada, noting that for the short term, the closely watched U.S. nonfarm-payrolls report for December looms large on Friday.
“It’s difficult to be sure of the market’s reaction because a lot of traders are away at the moment and volumes are light, so any moves are likely to be exaggerated slightly,” he said. Mark Hulbert: How special is January?
‘A few days of gains’
Atif Latif, director of trading, equities and derivatives at Guardian Stockbrokers, said he expects an “aggressive move up” for stocks. That will be driven by a combination of fresh money being invested and a trigger of stops on positions that took a bearish view into the holiday trade, he said.
“We are anticipating a few days of gains until the euphoria settles down and would at the latter part of the week as an opportune time to look to start moving to defensive positions into a correction before the next phase up,” he said in emailed comments.
At 10 a.m. Eastern, the Institute for Supply Management survey will be released. The index is forecast to rise to 50.3% from 49.5% in November, according to economists surveyed by MarketWatch. Read more in Economic Preview
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