(By Balachander) U.S. stocks rallied on the first trading day of 2013 after lawmakers in Washington reached an agreement to avert the "fiscal cliff" of tax increases and spending cuts.
The S&P 500 Index rose 2.54 percent to end at 1,462.42. The Dow Jones Industrial Average gained 2.35 percent to finish at 13,412.55. The Nasdaq Composite Index climbed 3.07 percent to close at 3,112.26.
The fiscal cliff bill, known as the American Taxpayer Relief Act (ATRA) of 2012, was passed by an overwhelming bipartisan majority in the Senate on Tuesday.
President Barack Obama will sign the legislation that raises taxes on the wealthiest 2 percent of Americans while preventing a middle-class tax hike that could have sent the economy back into recession, The White House said.
Meanwhile, the bill postpones for two months the automatic spending cuts that were slated to start this week.
On the economic front, the Institute for Supply Management's manufacturing survey showed the index rose to 50.7 last month from 49.5 in November and also came in better than expectations. A reading above 50 indicates expansion.
Separately, a report from the Commerce Department showed construction spending unexpectedly fell 0.3 percent in November versus expectations of a 0.6 percent increase.
Hot Stocks Of The Day: AAPL, MSFT, INTC, EBAY, FB, HPQ, X, ZIP, DOLE, SGYP
Apple Inc. (NASDAQ: AAPL), Microsoft Corp. (NASDAQ: MSFT), Intel Corp. (NASDAQ: INTC), eBay Inc. (NASDAQ: EBAY), Facebook Inc. (NASDAQ: FB) and Hewlett-Packard Co. (NYSE: HPQ) gained more than 3 percent.
United States Steel Corp. (NYSE: X) advanced 8.55 percent. Credit Suisse upgraded rating on the stock to "outperform" from "neutral".
Zipcar Inc. (NASDAQ: ZIP) soared 47.82 percent after the car sharing network agreed to be acquired by Avis Budget Group Inc. (NASDAQ: CAR) for $12.25 per share in cash or a total of roughly $500 million.
Dole Food Company Inc. (NYSE: DOLE) plunged 13.43 percent after the company said the fresh fruit business of the new Dole is continuing to experience declining earnings in a continued difficult economic environment.
Synergy Pharmaceuticals (NASDAQ: SGYP) surged 18.06 percent after the company announced positive results from a late-stage study of its chronic constipation treatment.
AirMedia Group Inc. (NASDAQ: AMCN) gained 5.73 percent after the China-based operator of out-of-home advertising platforms lifted its revenue forecast for the fourth quarter.
European markets closed more than 2 percent higher, with Germany's DAX up 2.19 percent to close at 7,778.78. France's CAC40 rose 2.55 percent to finish at 3,733.93. The U.K.'s FTSE 100 advanced 2.20 percent to end at 6,027.37.
Among Asian markets, Hong Kong's Hang Seng Index advanced 2.89 percent to end at 23,311.98. India's BSE Sensex ended at 19,714.24, up 0.68 percent. China's Shanghai Stock Exchange Composite Index and Japan's Nikkei 225 were shut for holidays.
Commodity & Currency Scan
Crude oil futures rose 1.15 percent to $92.89 per barrel, while natural gas futures dropped 3.43 percent to $3.24 per million metric British thermal units. Gold futures gained 0.59 percent to $1,685.6 per ounce and silver futures added 2.42 percent to $30.96 per ounce.
In the currency market, the euro edged 0.14 percent lower against the U.S. dollar to 1.3185. The British pound inched up 0.03 percent against the greenback to 1.6254, while the dollar gained 0.65 percent against the Japanese yen to 87.2600.