Wall Street Rallies With Potential Syria Action Delayed

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U.S. stocks surged on Tuesday after U.S. President Barack Obama opted to seek congressional authorization for military action against Syria, a move that was likely to delay any strike for at least several days.

Wall street

U.S. stocks surged on Tuesday after U.S. President Barack Obama opted to seek congressional authorization for military action against Syria, a move that was likely to delay any strike for at least several days.

Market gains were broad, though a pair of multi-billion-dollar deals involving Dow components limited the blue chip index's gains.

Equities have recently been pressured by the prospect of a Western strike against Syria after chemical weapons were used to kill civilians. The geopolitical uncertainty contributed to steep losses in August, the worst month for the S&P 500 since May 2012.

Congress returns from its summer recess on September 9, and any vote to authorize a strike will come after that. While Obama has been pushing Congress to back his plan, passage is by no means certain, further easing concerns over an imminent strike.

"Going to Congress creates more certainty about the engagement protocol, and there seems to be a more cohesive approach as to how the government will proceed. That's very good for markets," said Steven Baffico, chief executive officer at Four Wood Capital Partners in New York.

U.S. crude futures dipped 0.2 percent. Oil spiked 2.5 percent in August, largely driven by concerns that military action in the Middle East would impact crude supplies.

The Dow Jones industrial average .DJI was up 97.58 points, or 0.66 percent, at 14,907.89. The Standard & Poor's 500 Index .SPX was up 16.10 points, or 0.99 percent, at 1,649.07. The Nasdaq Composite Index .IXIC was up 42.29 points, or 1.18 percent, at 3,632.16.

Gains were broad, with more than 70 percent of stocks on both the New York Stock Exchange and Nasdaq trading higher. However, gains were slightly limited in the Dow with Verizon and Microsoft lower after announcing major deals.

Verizon Communications (VZ.N) agreed on Monday to pay $130 billion to buy Vodafone Group (VOD.L) (VOD.O) out of its U.S. wireless business, bringing an end to an often tense 14-year marriage. Verizon sank 4.8 percent to $45.10 while U.S. shares of Vodafone lost 1.5 percent to $31.87.

Nokia Corp (NOK.N) agreed to sell its handset business to Microsoft Corp (MSFT.O) for $7.2 billion, sending its U.S. shares up 38 percent to $5.39. Microsoft fell 4.6 percent to $31.86.

"It would be very difficult to get these deals done without a healthy capital market, so these deals are very positive for investors to see," said Baffico.

In the latest economic data, the Institute for Supply Management's August manufacturing index came in at 55.7, above expectations for a reading of 54. July construction spending rose 0.6 percent, twice the rate that had been expected.

The U.S. stock market was closed on Monday for Labor Day and trading volume could continue its recent trend of being light with many traders away for the holiday.

In the S&P, investors will be watching the 100-day moving average at 1,639.42, which the index has been unable to close above since August 26. Holding over that level would be a positive sign of near-term momentum.

CBS Corp (CBS.N) on Monday reached an agreement with Time Warner Cable Inc (TWC.N) to end a month-long blackout of its stations in New York, Los Angeles and Dallas. Financial terms of the deal were not disclosed. Shares of CBS rose 4 percent to $53.14 while Time Warner Cable added 1.7 percent to $109.19.

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