NEW YORK — The fiscal cliff compromise, even with all its chaos, controversy and unresolved questions, was enough to send the stock market shooting higher Wednesday, the first trading day of the new year.
All the major U.S. stock indexes swelled more than 2 percent in early trading and were still up significantly in the afternoon. The Dow Jones industrial average briefly surged to its biggest gain in six months.
The reverie multiplied across the globe, with stocks throughout Europe and Asia leaping higher.
In the United States, the rally was extraordinarily broad. For every stock that fell on the New York Stock Exchange, roughly 9 rose. Technology and bank stocks rose the most. U.S. government bond prices fell as investors pulled money out of safe-harbor investments. Zipcar soared nearly 50 percent after agreeing to be bought by Avis.
The deal that politicians hammered out merely postpones the country's budget reckoning.
Washington negotiations remind me of the Beach Boys song, ‘We'll have fun, fun, fun 'til her daddy takes the T-Bird away,' Jack Ablin, chief investment officer of BMO Private Bank in Chicago, wrote in a note to clients.
According to many experts, the markets were celebrating Wednesday not because investors love the budget deal that was cobbled together, but because they were grateful there was any deal at all.
And the United States is still bumping up against its borrowing limit, or debt ceiling.
There's definitely another drama coming down the road, said Lehmann. That's the March cliff.