Market Recap: Stocks Rise on Hopes of 'Fiscal Cliff' Deal

Markets did well today:

▲ Dow: +1.65 percent

▲ Nasdaq: +2.21 percent

▲ S&P: +1.99 percent

Precious metals:

▲ Gold: +1.20percent to $1,729.23 an ounce

▲Silver: +2.69 percent to settle at $32.99

Commodities:

▲ Oil: +2.33 percent

Markets were up because:

Investors seized on hope that Washington will reach a deal on the federal budget and drove stocks to their biggest gain in two months. A pair of strong corporate earnings reports also helped.

The Dow Jones industrial average closed up 207 points, or 1.7 percent. Since President Barack Obama and a divided Congress were returned to power Nov. 6, the Dow had fallen six out of eight days and slid a total of 650 points.

White House staff and congressional leaders are in talks to avoid going over a "fiscal cliff" on Jan. 1, when tax increases and mandatory government spending cuts are set to take effect.

While Obama and Republicans appear at odds on whether tax rates for the wealthiest Americans should rise, lawmakers suggested over the weekend that progress is possible.

"I can tell you that the fiscal cliff is focusing the mind," said Illinois Sen. Richard Durbin, a Democrat, said on CNN's "State of the Union." He said he had heard from Republicans "the beginning of a negotiation."

Comments like those comforted investors, who are grasping for signs that the negotiations might go somewhere.

The Dow finished up 207.65 points at 12,795.96. The Standard & Poor's 500 index rose 27.01 points, or 2 percent, to 1,386.89. The Nasdaq composite average gained 62.94, or 2.2 percent, to 2,916.07.

The S&P 500 and Nasdaq were lifted by Apple, which had its biggest one-day gain since April. It rose $38.05, or 7.2 percent, to $565.73. Some analysts cast doubt on a sell-off that had pushed the stock down more than 20 percent from its recent peak.

Corporate earnings reports also boosted the indexes. Lowe's said its third-quarter profit surged 76 percent. That followed a strong report from Home Depot last week. Lowe's rose $1.98, or 6.2 percent, to $33.96.

Materials stocks, a category that includes foresting companies, metal producers and miners, soared, supported by the latest sign that a recovery in the housing market has stabilized.

The National Association of Realtors said sales of previously occupied homes in the U.S. rose in October, helped by a stronger job market and record-low mortgage rates. The pace of sales is roughly 11 percent higher than a year ago.

Stocks fell in each of the past four weeks as traders fretted about the possibility that lawmakers will fail to prevent the spending cuts and tax increases from taking effect.

Monday's gain for the Dow was its biggest since Sept. 13.

For nearly two weeks, the index has closed below its 200-day average, which on Monday stood at 1,382. It surpassed that marker Monday afternoon. Frederick said that might signal more buying.

Technical levels are historic averages and other indicators used by some traders to decide if stocks are a good value.

The market is closed on Thursday for Thanksgiving and will close early Friday.

​The Associated Press contributed to this report.