Lawmakers have agreed to a fiscal deal that raises taxes on Americans earning more than $400,000 a year, and delays automatic spending cuts until March 1.
NEW YORK (CNNMoney)
The House reached a deal late Tuesday that keeps the Bush tax cuts in place for most Americans, but raises the tax rate on individuals earning more than $400,000 and married couples earning over $450,000.
Congress also agreed to kick the can down the road on automatic spending cuts, which are now set to go into effect March 1.
Meanwhile, lawmakers allowed the payroll tax cut to expire but extended federal emergency unemployment insurance benefits for another year.
U.S. stock futures were up sharply early Wednesday, suggesting investors are encouraged by the progress. The gains stretched across a variety of industries. Apple (AAPL, Fortune 500) stock futures rose 2.4%, Bank of America (BAC, Fortune 500) added 2.5%, and United States Steel (X, Fortune 500) was up 3.9% in premarket trading.
But additional -- and perhaps more intractable -- challenges remain. Congress must soon raise the debt ceiling, and figure out plans for the postponed spending cuts and the federal budget.
Related: 3 more fiscal cliffs loom
"Congress has done the easy part," said Lewis Alexander, chief U.S. economist for Nomura, in a research note. "Now a new Congress will have to tackle the hard part -- reduce long-term spending, raise additional revenue and increase the debt limit."
All major global markets were closed Tuesday for the New Year's holiday -- but many overseas markets posted strong gains Wednesday after news of the fiscal deal broke.
European markets were broadly higher in early trading, posting gains of more than 2%. Asian markets ended higher. Australia's ASX All Ordinaries index added 1.3%. South Korea's KOSPI gained 1.7% and the Hang Seng in Hong Kong advanced 1.9%.
Japan's Nikkei and the Shanghai Composite remain closed in an extended New Year's holiday.
Fear & Greed Index
Aside from weighing the deal's impact, investors will get some economic data to consider after the opening bell.
At 10:00 a.m. ET, the Institute for Supply Management will release its monthly manufacturing index for December, and the Census Bureau will release its data on construction spending in November.
In company news, Avis Budget Group (CAR, Fortune 500) announced it will acquire Zipcar for $12.25 a share -- a 49% premium over its closing price on Monday. Zipcar (ZIP) shares rose 47% in premarket trading.
First Published: January 2, 2013: 3:58 AM ET
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