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U.S. Stock-Index Futures Advance as Lawmakers Pass Budget Deal

Jan. 2 (Bloomberg) -- U.S. stock futures rose, after the largest year-end rally for the Standard & Poor’s 500 Index since 1974, as lawmakers passed a bill averting spending cuts and tax increases threatening a recovery in the world’s biggest economy.

Apple Inc. and Facebook Inc. jumped more than 2.7 percent to lead gains among the largest companies. Bank of America Corp. and Citigroup Inc. surged at least 2.9 percent as banks rallied. United States Steel Corp. climbed 3.9 percent after the shares were upgraded at Credit Suisse Group AG. Zipcar Inc. soared 48 percent after Avis Budget Group Inc. agreed to buy the company.

S&P 500 futures expiring in March jumped 1.9 percent to 1,446.5 at 8:30 a.m. in New York. The equity benchmark surged 1.7 percent on Dec. 31, the biggest rally on the final day of a year since 1974, as Republican and Democratic lawmakers made last-minute concessions to finalize the deal. Dow Jones Industrial Average futures soared 207 points, or 1.6 percent, to 13,234 today.

“The market should open higher but I don’t think there’s going to be euphoria because we already went up on Monday and that solution was already expected,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva. “Now we have to focus on how they can cut expenses and if growth is going to be there. This is the main focus for the beginning of 2013.”

The House of Representatives passed a bill just after 11 p.m. in Washington yesterday by a vote of 257-167, undoing income tax increases for more than 99 percent of households.

Fiscal Cliff

The bipartisan vote broke a yearlong impasse over how to prevent more than $600 billion in tax increases and spending cuts that could lead the economy back into recession. President Barack Obama said he will sign the bill into law.

The measure isn’t the grand bargain on deficit reduction lawmakers wanted when they created the tax-and-spending deadlines over the past three years. While avoiding most of the immediate pain, it is only one step toward curbing the federal deficit -- an issue that will return with a February fight over raising the $16.4 trillion debt limit.

The S&P 500 advanced 13 percent in 2012, extending the bull market rally to 111 percent since March 9, 2009. Stocks of financial institutions and consumer discretionary companies advanced more than 21 percent last year.

Manufacturing in the U.S. probably expanded in December, economists said before a report at 10 a.m. in Washington. The Institute for Supply Management’s factory index rose to 50.4 last month from 49.5 in November, which was the lowest since July 2009, according to the median forecast of 68 economists surveyed by Bloomberg. Fifty marks the dividing line between expansion and contraction.

Construction spending increased in November, separate figures may show.

Apple, Facebook

Apple, the world’s most valuable company, jumped 2.8 percent to $547. Facebook, the company that runs the largest social-networking website, advanced 2.7 percent to $27.35.

Financial companies rallied. Bank of America Corp., the second-biggest U.S. bank by assets, rose 3.2 percent to $11.98. Citigroup added 2.9 percent to $40.70.

U.S. Steel Corp., the largest U.S. producer of metal by volume, gained 3.9 percent to $24.77. The stock was upgraded to outperform from neutral at Credit Suisse, which said the U.S. steel sector may be poised for a bounce.

Zipcar surged 48 percent to $12.16. Avis Budget, an automobile rental company, agreed to buy the car-sharing firm for $491 million, or $12.25 a share, targeting consumers looking for an alternative to owning their own auto. The offer is 49 percent higher than the Cambridge, Massachusetts-based company’s Dec. 31 closing price.

Hewlett, GM

Hewlett-Packard Co., the largest maker of personal computers and printers, gained 2.9 percent to $14.67. General Motors Co. added 2 percent to $29.40.

Molycorp Inc. gained 8.6 percent to $10.25. The company’s low valuation and the chance to lock in rare-earth resources could spur manufacturers from Nissan Motor Co. to Siemens AG to make a bid, Byron Capital Markets Ltd. said.

The owner of the biggest U.S. deposit of metals that go into everything from smartphones to solar panels and hybrid cars handed investors losses of 61 percent in 2012 amid a slump in rare-earth prices, cost overruns at its California mine, a regulatory probe and the departure of its chief executive officer. Even after the shares rebounded from a record low in November, Molycorp is trading at a 19 percent discount to its book value, according to data compiled by Bloomberg.

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