U.S. stocks surged on Monday amid signs of progress in budget negotiations, while Canadian stocks retreated.
The S&P 500 closed at 1430.36, up 16.78 points or 1.2 per cent, finishing the day close to a two-month high. The blue-chip Dow Jones industrial average closed at 13,235.39, up 100.38 points or 0.8 per cent. In Canada, the S&P/TSX composite index closed at 12,281.35, down 15.37 points or 0.1 per cent.
The gains in the United States seemed largely tied to easing concerns about the so-called “fiscal cliff” of automatic tax increases and spending cuts in the New Year should Republicans and Democrats fail to reach an agreement on the budget.
Now, House Speaker John Boehner has signalled a willingness to allow tax increases on Americans earning more than $1-million (U.S.) – a threshold still well above what President Barack Obama is calling for but an offer that suggests Republicans might be backing down from an earlier intransigence toward all tax increases.
Meanwhile, the economic backdrop wasn’t supportive of stocks: A survey of New York-region manufacturing activity fell more than expected.
Apple Inc. which had dipped close to the $500 (U.S.) mark soon after trading began following target price cuts by Citigroup and Canaccord Genuity, rebounded soon after. It ended 1.8 per cent higher, at $518.83.
Home building stocks saw some big gains: PulteGroup Inc. rose 5.3 per cent and D.R Horton Inc. rose 5.1 per cent.
Within Canada’s benchmark index, materials fell 0.7 per cent, financials fell 0.2 per cent and energy stocks rose just 0.1 per cent.
Sun Life Financial Inc. fell 3.9 per cent after it announced a deal to sell its U.S. annuity business to Delaware Life Holdings for $1.35-billion. The deal is considered an attempt by Sun Life to reduce its risk profile and earnings volatility.
Meanwhile, key commodity prices showed little change. Crude oil rose to $87.20 a barrel, up 47 cents. Gold rose to $1,698.20 an ounce, up $1.20.