U.S. stocks, oil rebound on strong consumer data
By Herbert Lash
NEW YORK (Reuters) - U.S. stocks and oil prices gained on Friday on a rise in U.S. consumer sentiment to a more than five-year high, outweighing gloom that the "fiscal cliff" in the United States and Europe's economic woes may lead to a world recession.
Stocks later trimmed gains after President Barack Obama said any deal with Congress to avert a fiscal crisis must come with higher taxes on the wealthiest Americans.
U.S. Treasury bonds cut losses to trade almost flat on Obama's remarks, in which the newly re-elected president invited congressional leaders to the White House next week to start negotiating.
The so-called fiscal cliff, aimed at cutting the federal budget deficit, could take an estimated $600 billion out of the economy in automatic spending cuts and tax hikes, severely hindering economic growth.
"Clearly taxes are going up and that is something the market doesn't like. There is concern the economy continues to weaken, and there is not much left in the tank in terms of making corporate profitability better," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
The surprisingly strong sentiment survey showed American consumers felt more optimistic about employment prospects and the economic outlook, according to a Thomson Reuters/University of Michigan index, easing the gloom from Europe.
The MSCI world equity index .MIWD00000PUS has lost more than 2 percent since Monday and looked set to close on Friday with a weekly decline that would be the steepest since June. The index was little changed at 323.37.
In late trading, the Dow Jones industrial average .DJI was up 12.65 points, or 0.10 percent, at 12,823.97. The Standard & Poor's 500 Index .SPX was up 4.39 points, or 0.32 percent, at 1,381.90. The Nasdaq Composite Index .IXIC was up 14.63 points, or 0.50 percent, at 2,909.99. Continued...