Wall Street Welcomes Tax-cut Deal

The Dow Jones Industrial Average rose 0.63%; the S&P 500 index increased 0.68%, while Nasdaq climbed 0.70%.

Wall Street stocks rose as investors breathed a sigh of relief after President Barack Obama struck a deal with Republicans to extend tax cuts that were due to expire next year.

"Sentiment is being boosted by yesterday's late-day preliminary agreement in the U.S. to extend tax cuts to all Americans," said analysts at Charles Schwab, adding that it would "help consumers and businesses plan for the future."

The Dow Jones Industrial Average rose 71.52 points (0.63%) to 11,433.71 by 1500 GMT, while the S&P 500 index, a broader measure of the market, gained 8.37 points (0.68%) to 1,231.49.

The tech-rich Nasdaq climbed 17.68 points (0.70%) to 2,613.11.

Obama announced late on Dec. 6 a decision to extend tax breaks for all income brackets, including the wealthiest Americans, in an 11th-hour deal aimed at averting a big tax hike on January 1 amid a fragile economic recovery.

In exchange for the extension of the tax cuts introduced under his Republican predecessor George W. Bush, which Obama had fought against for the wealthiest Americans, the Democratic president obtained a 13-month extension of unemployment benefits.

"The tax deal reached by the Obama administration and congressional Republicans will be good for the economy next year. The proposed temporary tax cuts and spending increases will provide a substantial boost to growth in 2011," said analyst Mark Zandi of Moody's Analytics.

On Dec. 6, stocks closed mixed as traders weighed remarks by Federal Reserve boss Ben Bernanke signaling the central bank was ready to introduce new stimulus steps to boost the fragile recovery.

Copyright Agence France-Presse, 2010

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