NEW YORK - Optimism that President Barack Obama and congressional leaders will reach a deal on the budget deficit and avoid the "fiscal cliff" helped stocks notch their first advance in four days.
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 Dow Jones Industrial Average closed up 45.93 points, or 0.4 percent, at 12,588.31, after falling as much as 71 points in midmorning. The Standard & Poor's 500 index rose 6.55 points, or 0.5 percent, to 1,359.88, and the Nasdaq rose 16.19 points, or 0.6 percent, to 2,853.13.
Investor concern that Obama and Congress won't reach a deal on how to cut the deficit has caused a selloff in stocks since Election Day. The Dow is down 5 percent since Nov. 6.
Mitch Stapley, chief investment officer at Fifth Third Asset Management, says that investors and traders are likely to be in for a rough ride until the politicians have brokered a deal.
"Volatility is going to be the hallmark as we go through this process. ... It's going to be a very choppy period coming up," Stapley said.