Earlier this morning it appeared as if the market was in for its fifth consecutive decline. While the Dow Jones Industrial Average (^DJI 1.18%) began the day slightly higher, it soon remounted its descent. However, the tide turned rapidly around 11:40 EST, after which the blue-chip index shot up by over 100 points in the span of only 20 minutes.
Why the market shot up
To the market's obvious surprise, it appears as if the president and lawmakers may be on track to resolve the fiscal cliff after all. After a meeting between democratic President Obama and republican House Speaker John Boehner, the two sides agreed to a "fast-paced negotiation process" to address the issue.
The possibility that political paralysis would send the economy plunging over the proverbial cliff -- which entails draconian spends cuts and tax increases -- has grasped the attention of both traders and business leaders since the election.
Earlier this week, as I've noted, the CEO at Bank of America (BAC 1.00%) Brian Moynihan, said that "[t]he impacts of the fiscal cliff are already being felt. Simply put, our clients tell us they need more clarity before they can invest." And the CEO of JPMorgan Chase (JPM -0.60%) Jamie Dimon, made a similar point: "I've spoken to CEOs who say, you know, absolutely, we are making decisions to protect ourselves from the 'fiscal cliff' and those are like investment decisions and hiring decisions."
Consequently, it perhaps should come as no surprise that the market responded the way it did following the announcement out of Washington.
The market's biggest movers today
With respect to individual corporate news, Hewlett-Packard (HPQ 0.86%) is the worst performing Dow component, down over 3% with a little over an hour left in the trading session. The move came after fellow personal computer maker Dell (DELL.DL) reported worse than expected third-quarter earnings this morning.
Also lower today are both Bank of America and JPMorgan. The latter made news today after it, along with Credit Suisse, agreed to pay $417 million to settle claims by the Securities and Exchange Commission related to their handling of subprime mortgages both before and during the financial crisis.
It was also reported today that regulators plan to serve JPMorgan with a cease-and-desist order concerning its allegedly weak internal controls over money laundering from the likes of Mexico and Iran. Standard Chartered and HSBC Holdings came under similar investigations earlier in the year. The latter has since said that it expects to face a fine of at least $1.5 billion.
And finally, the oil giant BP (BP 0.08%) announced today that it has agreed to settle criminal charges against it. By pleading guilty to 11 counts of "seaman's manslaughter" and one count of obstruction of Congress -- the latter stemming from misleading information that it provided to the lawmaking body -- the company will pay a fine of $4.5 billion. In addition, it faces further monetary damages in a litany of civil suits.
