Stocks are up broadly this afternoon on hopes that a resolution to the fiscal cliff is in sight. With roughly an hour left in the trading session, the Dow Jones Industrial Average (^DJI 0.40%) is up by 55 points, or 0.42%.
There are two specific reasons why investors and traders appear to be more optimistic today than in weeks past. First, Republican House Speaker John Boehner finally came forward yesterday with a proposal to increase the tax rates on people who earn more than $1 million a year. The move represents a dramatic shift in the Republican strategy to fight tax hikes at all cost.
And second, Speaker Boehner purportedly met with President Obama at the White House today to hash out other areas of disagreement. Specifically, in exchange for cutting entitlement programs, the President wants to increase the tax rate on people who earn more than $250,000, lowering the $1 million threshold proposed by Speaker Boehner.
Politics aside, however, many political analysts and commentators are confident that a deal will be reached soon, because procrastination could interfere with policymakers' holiday plans. Suffice it to say that while politicians in Washington are more than willing to play chicken with our nation's economic well-being, they're much less tolerant of any type of infringement on their holiday break. Here's to hoping they'll extend their break indefinitely!
With respect to individual stocks, Bank of America (BAC -0.21%) is leading the Dow higher today. Shares of the nation's second-largest bank by assets are up almost 3% in mid-afternoon trading, adding to its domination of the index in 2012. Since January, they've nearly doubled in price, beating runner-up Home Depot (HD 0.94%) by roughly 40 percentage points. Click here to see why I've said that it's time to buy B of A.
Heading lower, alternatively, are shares of Hewlett-Packard (HPQ -0.46%), down about 4% today. It's no coincidence that HP is also the Dow's worst-performing stock this year. Since the company reported an $8.8 billion goodwill writedown at the end of the third quarter, its share price has plummeted, adding to an already horrible year.
The runner-up in terms of worst 2012 performance is Intel (INTC -9.20%), which is down nearly 15% over the past 11 months. However, many analysts and investors -- myself included -- are hurriedly accumulating shares of the chip maker to exploit its recent weakness and lock in an almost 5% yield. Click here to see why our technology analyst Anders Bylund believes it's time to buy Intel.
