Stocks gain on optimism that budget deal is near

STEVE ROTHWELL AP Business Writer Published:

NEW YORK (AP) -- Stocks edged higher on Wall Street amid optimism that the lawmakers in Washington are closing in on a budget deal that will stop the U.S. going over the "fiscal cliff."

The Dow Jones industrial average rose 42 points to 13,277 as of 10:37 a.m. The Standard & Poor's 500 gained six points to 1,437. The Nasdaq composite rose 20 points to 3,030.

House Speaker John Boehner told reporters Tuesday that he remains hopeful that a fiscal cliff compromise can be reached but, says President Barack Obama has yet to offer a balanced deficit-cutting plan. Boehner said that Obama's latest offer is for $1.3 trillion in tax increases over the next decade with $850 billion in spending cuts is not balanced enough.

"People are cheering the prospect for some compromise in Washington right now," said Joe Costigan, director of equity research at Bryn Mawr Trust Co. "At the moment there is some pretty good news and the market is reacting favorably to it, but the deal isn't done yet."

Stocks slumped after the election Nov. 6 on concern that a divided government would struggle to reach an agreement before Jan. 1, when a series of series of tax increases and government spending cuts are scheduled to take effect if no deal is reached. Those measures could push the U.S. back into recession. The S&P has since recouped all of those losses.

The yield on the 10-year Treasury note climbed 1 basis point to 1.79 percent.

Among stocks making big moves today;

Arbitron, a provider of radio ratings, surged $8.96 to $47.01 after TV ratings company Nielsen said it would buy Arbitron for about $1.26 billion.