Fiscal Deal Drives Stock Feeding Frenzy

Equities are rallying strongly on the first day of 2013 after politicians in Washington struck a deal to avert fiscal crisis in the United States.

S&P 500 futures are indicated to open higher by more than 1.5 percent, amid gains of more than 2 percent in most European markets. Asian stocks also rallied in the overnight session, led by a rally of almost 3 percent in Hong Kong.

Congress passed a compromise bill yesterday that will prevent most big tax increases and spending cuts in the near term. If lawmakers hadn’t acted, the so-called fiscal cliff would have subtracted hundreds of billions of dollars from gross domestic product and threatened to send the economy into recession.

Resolution of the crisis lets investors focus on other developments that are more positive, such as accelerating growth in China, American employment data later this week, and corporate earnings reports later this month.

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