We're mere hours away from going off the so-called fiscal cliff, and by the market's reaction this morning, you'd think it's not as big a deal as most people think. As the day moved along, markets popped further on hope of a pending deal. Late in trading, the Dow Jones Industrial Average (^DJI 0.06%) has gained 0.22% and the S&P 500 (^GSPC -0.22%) is up 0.61%.
One reason markets haven't dropped today is the belief that a last-minute deal will get done, possibly in the next few hours. Congress and the White House have been working on a small deal that would avert some of the fiscal cliff, and when President Obama spoke at 1:30 ET, it sounded as if a deal was very close. But there's still no certainty that a deal will pass both houses of Congress, so there are a lot of questions outstanding. Investors will need to hold on tight if a deal isn't reached by Wednesday, when markets open again.
In company news, Intel (INTC -1.79%) has jumped 0.9% today after rumors emerged that it will unveil a subscription TV product at the Consumer Electronics Show next week. Companies have tried for years to break cable's grip on content, and this is the latest attempt. Google (GOOGL 0.35%) and Apple (AAPL -0.57%) have tried to revolutionize TV in the past and had only mild success, and now Intel is taking a shot. We'll have to wait for details, but with the PC business struggling, Intel is trying to gain a broader reach in the TV revolution.
Caterpillar was the biggest winner on the Dow, rising 2.3% after Bloomberg reported that China's Purchasing Managers' Index rose to 51.5 in December, the best reading in 19 months. This figure indicates growth in the economy and should mean stronger demand for Caterpillar.
Markets will be closed tomorrow, so a fiscal cliff deal may be reached while investors are taking some time off. Stay tuned for the market's short-term reaction, and keep in mind that a fiscal cliff would be a positive for markets longer term as well.
