Stocks move higher on hopes for fiscal cliff deal
NEW YORK (CNNMoney) -- U.S. stocks turned higher Friday afternoon as investors welcomed positive comments from Washington lawmakers on the fiscal cliff negotiations.
Earlier in the Day, President Obama met with House Speaker John Boehner, Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell at the White House to discuss the fiscal cliff, the automatic onset of tax increases and spending cuts on Jan.1.
Boehner called the meeting "very constructive," noting that he outlined a framework that includes revenue and is "consistent with the president's fair and balanced approach."
Reid said that he felt "very good" about the talks and believes that they now have "the cornerstones of being able to work something out."
Though the comments were vague, they were enough to pull the market out of the red and into positive territory. The Dow Jones industrial average, S&P 500 and Nasdaq were up about 0.3% in midday trading. Earlier, the indexes were down between 0.5% and 0.9%.
"The encouraging noises emanating from Washington make it more likely, although it is still far from certain, that a deal to prevent the fiscal cliff will be reached and that any adverse impact on the economy will be fleeting," said John Higgins, senior markets economist at Capital Economics. "However, the stock market is likely to remain under pressure until a deal is done."
Investors have been on edge since Election Day while keeping close tabs on the fiscal cliff debate. Since Obama's re-election last week, all three indexes have lost more than 5%. They're down more than 2% this week alone.
And the Nasdaq composite is down more than 10% from its 12-year high reached in September, putting the tech-heavy index in correction territory.
Earlier Friday, a Federal Reserve report showed U.S. industrial production fell 0.4% in October. While the data fell short of economists' forecasts, it was likely impacted by Superstorm Sandy.
Investors will also mull the Federal Reserve's latest guidelines for bank stress tests, released Thursday evening.
In Europe, investors also have their attention on the fiscal cliff negotiations in the United States. Britain's FTSE 100 and the DAX in Germany fell 1.3% and France's CAC 40 slipped 1%.
Asian markets ended mixed. The Shanghai Composite lost 0.8%, while the Hang Seng in Hong Kong gained 0.2%, and Japan's Nikkei rose 2.2%.
Companies: Dell shares tumbled nearly 8% after the company announced disappointing third quarter results late Thursday, falling short of forecasts on both revenue and earnings. Income fell 47% over the same period last year, on weak PC sales. Rival Hewlett-Packard, also fell, making it the biggest laggard on the Dow. HP is set to report its latest earnings next Tuesday.
Gap shares rose after the retailer reported strong third quarter earnings late Thursday.
Sears Holdings, led by hedge fund manager Eddie Lampert, posted a quarterly loss Thursday of $498 million, much worse than analysts were expecting and wider than its year-earlier loss. Sales slid about 6% during the quarter. Shares of Sears tumbled 15%, making it the worst performer on the S&P 500.
Currencies and commodities: The dollar rose against the euro, the British pound and the Japanese yen.
Crude oil for December delivery rose 97 cents to $86.42 a barrel.
Investors are closely watching violence in the Middle East. Israel launched a series of air strikes Wednesday on what it said were terrorist targets in Gaza, and the Palestinian group Hamas vowed retaliation.
Gold futures for December delivery were down 30 cents $1,713.50 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury edged higher, pushing the yield down to 1.58% from 1.59% late Thursday.