Today: After months of waiting, investors boost stocks in response to "fiscal cliff" deal that could be especially beneficial to tech stocks, with Apple (AAPL), Facebook, HP and SunPower (SPWRA) showing big gains. Also: Zipcar sold to Avis.
Wall Street has largest one-day gain in more than a year after 'fiscal cliff' bill
After Congress finally passed a bill to avert the "fiscal cliff" -- potentially ruinous tax hikes on Americans -- during a New Year's Day session, Wall Street responded by pushing stocks higher Wednesday, producing a bountiful opening session that produced gains larger than any single day in 2012.
All three major U.S. indexes gained more than 2 percent: The blue-chip Dow Jones industrial average rose 2.3 percent; the broad-based Standard & Poor's 500 produced a larger one-day gain than in any 2012 session with a 2.5 percent gain; and the tech-heavy Nasdaq jumped 3.1 percent. The market tailed off toward the end of 2012, as investors took profits from a year when all three indexes made gains.
"It's a relief rally that we didn't stay over the cliff," Chase Investment Counsel president Peter Tuz told Bloomberg News. "We had a strong year in 2012 and people might have taken some money off the table and here it comes back to the market today," he added.
Congress passed a bill that extended Bush-era tax cuts for all but the highest earners, though it did not extend payroll taxes, which could still damage the economy. Politicians neglected to deal with the spending cuts that were also scheduled to take place at the end of 2012, instead delaying those cuts by two months, as well as the nation's debt limit, which was reached late in 2012.
The deal leaves a lot of work for Congress, which took more than a year of debate just to change the tax portion of the fiscal cliff one day past the New Year's Eve deadline.
"We got through the fiscal cliff. The next big thing, and probably more contentious thing, is negotiating the debt ceiling and possibly entitlement reform in early 2013," Jim Russell, senior equity strategist for U.S. Bank Wealth Management, told Reuters.
Wall Street has whipsawed for months while following the ups and downs of the fiscal cliff debate on Capitol Hill, so a relief rally after a bill finally passed was to be expected. However, movement in the near-term is tough to determine, as politicians still hold the economy's fate in their hands with the coming debates.
"It's good that they struck a deal, but there's a harder fight in the next six to eight weeks, and it's tough to imagine the market doesn't stay choppy until we get past the debt-ceiling debate," Atlanta Capital Management portfolio manager Richard England told the Wall Street Journal. "That doesn't mean the market has to go down in the interim, but maybe it doesn't go up much either."
Tech companies zoom higher, with Apple and Facebook continuing rebounds
Technology stocks were Wednesday's biggest gainers, as elements of the fiscal cliff deal were especially good for tech companies. Eric Savitz of Forbes reported that technology companies especially will gain from tax credits for research and development, as well as other aspects of the new tax laws.
Apple, which needed a late push to end 2012 with its leading market cap higher than $500 billion, continued to bounce back from its fourth-quarter "bear market" weakness with a gain of 3.2 percent Wednesday. The increase was preceded by reports on the next iterations of the company's iconic smartphone, with The Next Web finding evidence that the company is already testing its next phone and mobile operating system and analyst Brian White predicting that Apple will offer the next iPhone in a range of sizes and colors.
Facebook continued to revel in analysts' rosy views of its future, as JPMorgan analysts joined a chorus of underwriting banks and former bears in singing the praises of the Menlo Park social network Wednesday. The investment bank noted "strong advertising trends" at Facebook, especially in the mobile sector, in pushing its price target for the stock up to $35. Facebook shares gained 5.2 percent on the day to close at an even $28, only the second time Facebook has closed at $28 or higher since the end of November.
Hewlett-Packard was the worst-performing stock in both the Dow Jones and S&P 500 indexes in 2012, but the personal computer giant had a strong start to 2013 after filings late last year showed that it was working to divest itself of underperforming assets. The Palo Alto company's stock gained 5.4 percent to close at $15.02, its highest closing price since Oct. 2.
SunPower announced that it was selling two solar-power projects in Southern California to a company owned by Warren Buffett's Berkshire Hathaway. The San Jose solar manufacturer will receive more than $2 billion for the solar complexes, and investors liked the looks of that deal for SunPower's bottom line, sending shares up 9.1 percent to $6.13.
Other big increases in Silicon Valley included Advanced Micro Devices, which gained 5.4 percent and named a new chief financial officer; eBay (EBAY), which managed to hit another new 52-week high Wednesday as it gained 5.1 percent after a monster 2012; and some of the valley's biggest tech titans, such as Oracle (ORCL) (up 4.1 percent), Intel (INTC) (up 3.7 percent) and Cisco (CSCO) (up 3.5 percent).
Avis buys Zipcar for far less than IPO price
One of the biggest gains Wednesday on Wall Street belonged to Zipcar, the car-sharing service popular in the Bay Area that agreed to an acquisition by car-rental giant Avis.
Zipcar, based in Boston, agreed to an offer of $12.25 per share -- 49 percent higher than the stock's previous closing price, but far less than the initial public offering price of $18 a share or the stock's peak value of nearly $30.
The deal allows Avis to enter into a market segment that it had ignored while its two major competitors, Enterprise and Hertz, have launched such services. For Zipcar, the deal gives it access to a large fleet of rental cars to meet sudden demand spikes from its users.
Zipcar shares rose 48 percent to $12.18 in Wednesday trading, while Avis rose 5 percent to $20.77.
Silicon Valley tech stocks
Down: Palo Alto Networks, Workday, LinkedIn, Netflix
The tech-heavy Nasdaq composite index: Up 92.75, or 3.07 percent, to 3,112.26
The blue chip Dow Jones industrial average: Up 308.41, or 2.35 percent, to 13,412.55
And the widely watched Standard & Poor's 500 index: Up 36.23, or 2.54 percent, to 1,462.42
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.