Traders work on the floor of the New York Stock Exchange. (Stephen Chernin / AFP / Getty…)
NEW YORK — Investors poured back into the stock market on the first trading day of 2013 in a rally seen as a sigh of relief that President Obama and Congress were able to avert the so-called fiscal cliff and an immediate economic downturn.
The Dow Jones industrial average surged 308.41 points, or 2.4%, to 13,412.55 on Wednesday — the best one-day rise in more than a year. Wall Street followed rallies in European and Asian equities markets after Washington's last-minute fiscal deal late Tuesday.
The broader Standard & Poor's 500 index rose 36.23 points, or 2.5%, to 1,462.42. It was the S&P's best first-trading-day jump since 2009, according to Howard Silverblatt, senior index analyst for S&P Dow Jones Indices. The technology-heavy Nasdaq composite index gained 92.75 points, or 3.1%, to 3,112.26.
Though Washington may have averted an immediate downturn, political leaders put off stalemates over broad spending cuts in military and social programs to reduce the country's long-term deficit.
"They turned off the bomb," said Sean Kelly, head of equity trading at Knight Capital Group. "There's still danger in the whole thing, but as of right now there's no immediate danger."
Another fight over whether to raise the country's debt ceiling, or borrowing limit, could also rattle markets in coming weeks.
Doug Cote, chief investment strategist with ING Investment Management U.S., said the rally was one of "false relief" not based on the country's longer-term deficit problems, which remain an unresolved threat.
"There's relief that something got passed that was better than the worst-case scenario," he said.