All it took was a few declarations of optimism about a fiscal-cliff deal by political leaders to bring in the buyers. Market players are obviously hopeful that a deal will be done, and they are worried they will miss a big relief rally if they aren't in already.
We also had the Fed's mouthpiece at the Wall Street Journal post an article late in the day that Operation Twist will likely be extended. The market loves quantitative easing, and this helped keep the intraday rally going.
While the action was positive, you have to wonder if the market is a little too optimistic. I don't think anyone really expects the fiscal-cliff negotiations to be easy. There is a big difference between saying you are optimistic about a deal than actually making one. I'd be stunned if we don't have some downside action in the market soon as folks start to have doubts about whether a deal can actually be made.
All you really need to know about the market is that it is going to continue to dance around to the fiscal-cliff news for a while. Nothing else really matters. The market believes there will be a deal, though there will likely be skittishness about it from time-to-time, and we'll likely see a big move by the time a deal is actually done. Fear of being left behind trumps fear of no deal.
Have a good evening. I'll see you tomorrow.
