Nov. 28 - Summary of business headlines: Markets rally on fiscal cliff optimism; Costco, Disney to issue special dividend; Multiple bids for Knight Capital- sources; New home sales fall. Bobbi Rebell reports.
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U.S. stocks on the rise as hopes rise the U.S. will avert a financial crisis.
President Barack Obama said on Wednesday he hopes he and Congress can reach an agreement to avoid the looming "fiscal cliff" and shrink the budget deficit before Christmas.
Speaker of the House John Boehner said Republicans were willing to look at revenue increase as long as tax rates are not raised. The comments lifted stocks to close out Wednesday's session to the upside; the Dow posting a triple digit gain.
But stocks are far from immune from fiscal cliff risk according to Todd Petzel, chief investment officer at Offit Capital Advisors.
SOUNDBITE: TODD PETZEL, CHIEF INVESTMENT OFFICER, OFFIT CAPITAL ADVISORS (ENGLISH) SAYING:
"We know the stock market is going to watch the politicians very closely. And there is a high probability that at some point along the way there will be a misstep in Washington. People think they have a good deal. It will be a bad deal, and the market will tell them."
Companies continue to raise their dividends amid worries related to tax changes in 2013.
After the bell, Disney announced it will increase its annual cash dividend by 25 percent to $0.75 per share.
Costco stock jumped more than 6 percent after saying it will pay a special dividend totaling about $3 billion or $7 a share. That is the largest payout so far from any company ahead of a possible increase in the dividend tax.
Shares of Knight Capital jumped on news that Getco Holdings offered $1.4 billion or $3.50 a share. A source tells Reuters Virtu Financial has made a counter-offer for at least $1.1 billion in cash. In August, Knight suffered a trading loss of $440 million because of a software glitch, that put the firm on the brink of bankruptcy.
Some cracks in the housing market recovery. New U.S. single family home sales fell slightly in October, and sales for the prior month were revised sharply lower.
A separate report from the Fed showed U.S. economic growth was still modest. The so-called Beige Book showed consumer spending grew at a moderate pace, alluding to a generally upbeat holiday sales outlook.
In Europe, shares closed slightly higher on optimism that U.S. fiscal cliff crisis will be resolved.
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