US equities rallied following President Obama’s announcement that a plan to mitigate the looming fiscal cliff was possible within a week. Investor sentiment was further buoyed by better-than-expected service sector data, as well as news that China’s new leaders issued a statement on supportive measures for the Chinese economy.
The Dow Jones Industrial Average index climbed 82.71 points to close at 13,034.49 while the S&P500 index gained 2.22 points to close at 1,409.28.
The US services sector expanded modestly for the month of November. According to the Institute for Supply Management (ISM), its non-manufacturing purchasing managers’ index (PMI) rose to 54.7, beating market estimates of 53.5 and higher than the 54.2 figure posted in October. The business activity/production index leapt to 61.2 from 55.4 and the new orders index increased to 58.1 from 54.8.
Meanwhile, the employment index dropped to 50.3 from 54.9. According to ISM nonmanufacturing chief Anthony Nieves, it is unclear what impact Hurricane Sandy had on the service sector. He added that he thought the longer-term effects of Sandy would most likely be felt down the road.