NEW YORK - U.S. stocks jumped Tuesday morning on enthusiasm over a U.S. deal to extend tax cuts, but gave up most of their gains to end near neutral as the Irish parliament prepared to vote on harsh austerity measures.
Stock traders' enthusiasm wanes
Early gains sparked by Obama's agreement with GOP leaders evaporated later in the day.
By KATE GIBSON, MarketWatch
December 8, 2010 at 5:26AM
The euro slumped and the dollar rose, pressuring commodities.
"The market has been led by basic materials and oil, and when the dollar goes down, commodities and other dollar-denominated assets like equities go up. So the market tends to fade when the dollar strengthens," said Art Hogan, chief market strategist at Jefferies & Co.
The major indexes had maintained healthy gains for much of the day as Wall Street embraced President Obama's decision to compromise on tax cuts.
After being up more than 90 points, the Dow Jones industrial average ended down 3.03 points at 11,359.16.
The S&P 500 index climbed 0.63 points, or 0.1 percent, to end at 1,223.75, with industrials pacing gains that included all 10 of the index's industry groups.
The Nasdaq composite rose 3.57 points, or 0.1 percent, to 2,598.49.
Advancers edged just ahead of decliners on the New York Stock Exchange, where volume topped 1.6 billion.
Commodity prices started higher but reversed course, with crude slipping below $90 a barrel after breaking through that level for the first time in 26 months and gold falling $7.10 to finish at $1,409 an ounce on the New York Mercantile Exchange.
Late Monday, Obama announced a deal to extend Bush-era tax cuts for the higher-income bracket as well as middle-class Americans for two years. The agreement, which still must be sold to Congress, had Obama compromising on rates for the wealthiest Americans in exchange for a $120 billion break on payroll taxes and the extension of unemployment benefits.
"The two-year extension was expected, but we didn't expect the payroll tax cut or the accelerated depreciation," said Duessel.
The tax-cut deal spurred thinking among investors that another roadblock hindering economic recovery had been removed, said Robert Pavlik, chief investment officer at Banyan Partners.
"I don't necessarily agree," said Pavlik, who expressed doubts about whether the tax break would drive those in the upper-income bracket to buy more holiday sweaters or flat-screen TVs.
Distributed by McClatchy-Tribune Information Services.
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KATE GIBSON, MarketWatch
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