Wall St rallies on fiscal hopes, Spain hits euro

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US stocks rose on Wednesday after President Barack Obama said a deal to avert the looming fiscal cliff was possible within a week, while the euro slipped after a disappointing Spanish bond auction.
A more than 6 percent drop in tech giant Apple made for the stock’s worst day in almost four years and constrained Wall Street’s gains. The Nasdaq fared worse than the other indexes as a result.
Investors continued to keenly monitor any progress in talks to avoid the so-called fiscal cliff of year-end tax hikes and spending cuts. Obama said an agreement could be reached in a week if Republicans compromise on taxes.
“Just the idea that we could have some kind of timeline is enough to eliminate some of the concerns,” said Todd Schoenberger, managing partner at LandColt Capital in New York “The fiscal cliff is the headline driver, so anything even slightly positive will move markets.” Both Republicans and Democrats dug in on the talks, urging quick action but still offering no compromises.
Economists say the $600 billion in tax hikes and spending reductions that will start to go into effect at the beginning of next year could send the economy back into recession if politicians don’t come to an agreement to avoid it.
The euro fell after hitting a seven-week high against the dollar in early trading, stung by the disappointing Spanish bond sale and weak euro zone economic data. The euro was down at $1.31.
Investors also held off taking aggressive bets ahead of the European Central Bank’s policy meeting on Thursday, which will be watched for any signs on next year’s policy path.