Stocks Surge After 'Cliff' Deal
Morning Business Memo
Your 401(k) plan may be looking better this morning after a solid gain last year. Expect a big stock market bounce after the House passed the Senate's fiscal cliff agreement. Futures shot up after the drama finally ended late Tuesday. Economists had warned hundreds of billions of dollars in automatic tax hikes and spending cuts could have triggered a US recession this year.
Several leading European averages are up 2 percent today. Australian and Hong Kong stock indexes closed overnight at their highest levels since June 2011. The vote brings tax increases on high earners for the first time in 20 years. Single taxpayers earning more than $400,000 and couples over $450,000 will see their top marginal tax rate go up. The wealthiest Americans will also pay more on capital gains and dividends. The fiscal cliff deal stops income tax hikes for more than 98 percent of taxpayers.
During 2012 major stock averages rose for a fourth year in a row. The widely quoted S&P 500 index closed with an annual gain of 13.4 percent.
Good news for milk drinkers. The fiscal legislation that passed Congress averts the "dairy cliff"- putting off a steep increase in milk prices. The legislation includes a nine month extension for a 2008 farm bill that ran out at the end of December. Without the fix dairy subsidies would have plunged, and milk prices could have doubled.
Avis Budget Group (Nasdaq:CAR) is buying Zipcar (Nasdaq:ZIP) , the world's leading car sharing network. According to today's announcement Avis Budget will pay $12.25 per share in cash, a 49 percent premium over Monday's closing price. The transaction is subject to approval by Zipcar shareholders and is expected to be completed in the spring of 2013. Car sharing has grown to be a nearly $400 million business in the United States and is expanding rapidly in major cities around the world.
Many economists expect the US jobs market to improve this year especially during the summer and fall. But demand for unskilled jobs may continue a long term decline. One reason is the rise of robots: "You can go to many modern factories today and look out on the factory floor and see very few people but the people who are there are performing higher value jobs," says James Meigs, editor-in-chief of Popular Mechanics. Warehouse robots can move bar coded packages and have "the ability to sort and discriminate and make decisions on where it needs to go." Meigs says robots will do a lot more in the future. "Dumping out the French fries filling up the cokes flipping the burgers" at your local McDonald's could be one of many innovations.
Richard Davies Business Correspondent ABC NEWS Radio ABCNews.com twitter.com/daviesabc
