Washington (dpa) – Wall Street stock indices were higher Tuesday amid reports from Washington that President Barack Obama and opposition Republicans in Congress were making progress toward a deal to soften the looming ”fiscal cliff.”
Major income tax increases and cuts in federal spending will take effect in January unless Congress acts before the end of the year.
With an economic bite projected at 600 billion dollars in 2013 alone, the austerity measures of more than 3 per cent of gross domestic product risk throwing the United States back into recession by some estimates.
The left-leaning Obama has insisted that tax rates be allowed to rise on people earning more than 250,000 dollars a year. Conservative Republicans have argued that higher rates on any income bracket will be detrimental to the economy.
House Speaker John Boehner has offered increased revenue by reducing tax deductions that favour the rich, while seeking savings in pension and health-care programmes to reduce the long-term deficit.
US media reported Tuesday that Obama and Boehner are moving toward a compromise on the income threshold that might see higher tax rates.
The blue-chip Dow Jones Industrial Average rose 115.57 points, or 0.87 per cent, to 13,350.96. The broader Standard & Poor’s 500 Index gained 16.43 points, or 1.15 per cent, to 1,446.79. The technology-heavy Nasdaq Composite Index jumped 43.93 points, or 1.46 per cent, to 3,054.53.
The US currency slipped against the euro to 75.6 euro cents from 75.98 euro cents on Monday. The dollar was stronger against the Japanese currency at 84.19 yen, compared to 83.87 yen.