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  • Before the bell: U.S. stocks were poised to open higher Tuesday, after President Barack Obama announced a compromise with Republican lawmakers that would extend the Bush-era tax cuts for 2 years.
Market news
07.12.2010, 14:30

Before the bell: U.S. stocks were poised to open higher Tuesday, after President Barack Obama announced a compromise with Republican lawmakers that would extend the Bush-era tax cuts for 2 years.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were up nearly 1% ahead of the opening bell. Futures measure current index values against perceived future performance.

Stocks had climbed more than 2% last week as investors hoped for a deal that would extend current tax rates.

Late Monday, President Obama announced a deal with Republican leaders that would extend Bush-era tax cuts for 2 years and unemployment benefits for 13 months. It would also lower the payroll tax by 2 percentage points for a year.

"What that does is it removes uncertainty from businesses, from individuals, other entities as far as the taxes for 2011 and 2012 and also all the taxes would stay as they were," said Zahid Siddique, Associate Portfolio Manager of the Gabelli Equity Trust. "Assuming that we have a resolution, it is something that markets would like."

On Monday, major indexes ended mixed after drifting around breakeven for most of the day. Investors spent most of the day mulling over Federal Reserve chairman Ben Bernanke's pessimistic comments about the nation's economy.

While stock investors sat on the sidelines, commodities surged Monday. That rally continued Tuesday morning with gold hitting a fresh intraday high, oil topping $90 a barrel for the first time in more than 2 years, and silver prices hitting another 30-year high.

Commodities have been on a tear as investors see increased demand from countries like China. They're also being used a hedge against inflation and moving higher on the back of the weakening dollar, said Siddique. "As the dollar weakens, that means the commodities will move higher because they are linked to the dollar."

Currencies and commodities: The dollar fell against the euro and the British pound, but rallied against the Japanese yen.

Oil for January delivery gained $1.19 to $90.58 a barrel, crossing the $90 a barrel threshold for the first time since October 2008. Oil for January delivery settled at a new 2-year high Monday, at $89.38 a barrel.

Gold futures for February delivery rose $14.40 to $1,430.50 an ounce, after reaching a new intraday high of $1,432.50 earlier in the session. Gold settled at a record $1,416.10 an ounce Monday.

Silver for March delivery rose 95 cents, or 3.2%, to $30.68 an ounce. Earlier in the session, silver topped $30.75 an ounce -- a new 30-year high.

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