Economy

Financial Markets Cheer 'Fiscal Cliff' News

Looking up: Traders on the floor of the New York Stock Exchange earlier today. i i

Looking up: Traders on the floor of the New York Stock Exchange earlier today. Spencer Platt/Getty Images hide caption

itoggle caption Spencer Platt/Getty Images
Looking up: Traders on the floor of the New York Stock Exchange earlier today.

Looking up: Traders on the floor of the New York Stock Exchange earlier today.

Spencer Platt/Getty Images

Though more big battles lie ahead in Washington, Wall Street is following the lead of financial markets around the world in giving a thumbs-up to the deal that kept the federal government from going completely over the so-called fiscal cliff.

As The Wall Street Journal says, "U.S. stocks vaulted higher on the first day of the new year, joining a global equity rally after Congress' last-minute agreement on the deficit." Among the reasons for relief: The deal means income taxes won't be going up for about 99 percent of Americans. If they had risen as scheduled, some economists say, the still-recovering economy might have been pushed back into recession by a drop in consumer spending.

Lawmakers also at least postponed automatic cuts in federal spending.

After about 90 minutes of trading, the Dow Jones industrial average was up more than 230 points (1.77 percent).

Update at 5:08 p.m. ET, with closing prices:

The Dow Jones industrial average finished the day at 13,412.55 — up 308.41 points, or 2.35 percent. A broader measure, the S&P 500 stock index, closed up 36.23 points (up 2.54 percent) at 1,462.42. The tech-heavy Nasdaq gained 92.75 points, or 3.07 percent.

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