Stocks turn higher as fiscal talks progress

Stock market erases an early loss and turns higher on signs of progress in budget talks

Associated Press
Stocks finish higher on optimism over budget talks
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FILE - In this Thursday, Nov. 15, 2012, file photo, traders work on the floor at the New York Stock Exchange. Trading on world stock markets was lethargic Friday Nov. 16, 2012 after data showed Europe slipped back into recession and several big U.S. retailers disappointed investors with weak forecasts.(AP Photo/Seth Wenig)

NEW YORK (AP) -- Optimism that President Barack Obama and Congressional leaders can reach a deal on the budget deficit and avoid the "fiscal cliff" helped push stocks higher for the first day out of the past four.

The market started lower Friday but spiked higher shortly before midday as the top members of the House and Senate spoke at the White House following a closed-door session with Obama. House Speaker John Boehner and Senate Minority Leader Mitch McConnell both said they offered higher tax revenue as part of a deal. Boehner said he outlined a framework that is consistent with Obama's call for a "balanced" approach of both higher revenue and spending cuts.

"It's a good start ... the fact that they were all standing together," said Ben Schwartz, the chief market strategist at Lightspeed Financial, a New York-based broker.

The Down Jones industrial average was up 30 points at 12,595 as of 1:56 p.m. in New York, after falling as much as 71 points at mid-morning. The S&P was up four points at 1,357 and the Nasdaq rose 12 points to 2,850.

Investor concern that Obama and Congress won't reach a deal on how to cut the budget deficit has caused a sell-off in stocks since Election Day. The Dow is down 5 percent since Nov. 6. If an agreement isn't made, automatic government spending cuts and tax increases are set to kick in at the beginning of next year. The measures total about $700 billion for 2013 and could send the country back into recession.

The Dow is still lower for the week and is on track to record its fourth straight weekly decline. That slump has pared the index's gains for the year to 2.9 percent. The S&P 500 is also heading for a weekly decline, and is on track to have fallen three of the last four weeks.

Mixed reports as the third quarter earnings season draws to a close have also weighed on stocks.

Dell fell 72 cents to $8.85. The computer maker is struggling as consumers switch to tablets and smartphones away from PCs. Dell said that its revenue may fall as much as 13 percent in the fourth quarter.

Superstorm Sandy depressed U.S. industrial output in October, while production of machinery and equipment declined sharply, reflecting a more cautious outlook among businesses, according to a Federal Reserve report.

The Fed says industrial output fell 0.4 percent last month, after a 0.2 percent gain in September. Excluding the storm's impact, production at the nation's factories, mines and utilities would have been up about 0.6 percent.

Among stocks making big moves:

—Schiff Nutrition International Inc., a nutritional supplement company, jumped $10.01 to $43.93 after U.K.-based Reckitt Benckiser Group offered to pay $42 a share in cash to buy the company.

— Ruckus Wireless Inc., a maker of wireless networking equipment, dropped $1.14 to $13.89 on its first day of trading. That's a decline of 8 percent.

— Sears fell $10.40 to $47.73 after the company said sales at both its Kmart and Sears stores continued to tumble.

—Foot Locker rose $1.62 to $33.48. Its net income rose 61 percent in the third quarter.

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