Dow climbs 2.3 percent, S&P up 2.5 percent
NEW YORK, Jan. 2 (UPI) -- The first stock market session of 2013 began with a positive reaction to a new U.S. tax law that ended concern about a recession triggered by budget gridlock.
Major market indexes rose sharply on pent-up optimism after Congress passed the deal on taxes Tuesday and sent it to President Barack Obama to be signed into law.
Technically, the deal was a day late and it postpones a debate about spending cuts. But the fear of the default budget, which the new tax code eliminates, has been quelled.
The tax bill leaves federal tax rates intact for income up to $400,000 for individuals and $450,000 for families, circumventing concern that a large segment of the country will have less money to spend in 2013.
By close of trading, the Dow Jones industrial average added 2.35 percent or 308.41 points to 13,412.55.
In two trading sessions, the final day of trading in 2012 and this first session of the year, the Dow has added 474 points. Monday's gain was largely fueled by expectation that a budget deal was close.
The Nasdaq gained 3.07 percent Wednesday or 92.75 points to 3,112.26.
The Standard and Poor's 500 added 2.54 percent, 36.23 points, to 1,462.42.
The 10-year treasury note was off 23/32 to yield 1.84 percent.
On the New York Stock Exchange, 2,827 stocks advanced and 291 declined on a volume of 4.1 billion shares traded.
The euro fell to $1.3187 from Monday's $1.32. The dollar rose to 87.33 yen from 86.71 yen.
In London, the FTSE 100 index gained 2.2 percent, 129.56 points, to 56,027.37.
Markets in Japan were closed.
'Field of Dreams' movie site sold
DUBUQUE, Iowa, Jan. 2 (UPI) -- Investors have completed the purchase of the Iowa baseball field from the movie "Field of Dreams" and say they plan to add 24 more ball fields to the facility.
Go the Distance Baseball LLC -- a group led by Denise Stillman and her husband Mike that includes baseball Hall of Famer Wade Boggs -- closed the sale on the 193-acre property last week for $3.4 million plus interest, the Chicago Tribune reported Wednesday.
The Stillmans -- who saw the 1989 Kevin Costner film on one of their first dates together -- began in July 2010 to try to buy the field and farmhouse made famous in the Oscar-nominated film, the newspaper said.
Denise Stillman, president and chief executive officer of the company, said plans call for preserving the existing facility and adding 12 baseball fields and 60 clubhouses as part of an All-Star Ballpark Heaven to open in 2014, and the number of fields and clubhouses doubling by 2017.
Construction is to begin this spring.
"We've got that big milestone under our belt now, and we're just getting into the business of opening the (site)," she said.
Of more immediate concern is getting the site ready for the tourist season beginning April 1, the Tribune said. An estimated 65,000 visit the site each year.
The sale had been held up in part by a court challenge brought by neighbors who opposed the expansion, The Des Moines (Iowa) Register said.
Government clamping down on settlements
WASHINGTON, Jan. 2 (UPI) -- Federal agencies have begun to pay more attention to punitive settlements with corporations to ensure they are not used as U.S. tax write offs, a study says.
"Government agencies are beginning to realize that they've been asleep on the job when it comes to the tax implications of these settlements," The Washington Post quoted U.S. Public Interest Research Group senior analyst Phineas Baxandall as saying.
Corporations cannot deduct penalties paid to the government from their federal taxes, but portions of a settlement that go to compensating victims is often deducted as a business expense unless it is explicit in the agreement that this is forbidden, the Post reported Wednesday.
Since 2003, the Securities and Exchange Commission has had a blanket rule that no portion of a penalty payment can be deducted from federal taxes, but most federal agencies do not have similar policies.
As such, Wells Fargo agreed to pay $175 million to settle by the Justice Department that it targeted African-American and Latino borrowers for high interest loans with exorbitant fees. But part of that settlement is set up as compensation for victims, which can be written off as a business expense.
Consumer groups complain that taxpayers are paying at least part of the penalty for bad corporate behavior. Business groups argue that they cannot separate one business expense from another.
But some federal agencies are stipulating in the agreements that they cannot be used for tax deductions. The Justice Department's $4 billion settlement with British oil company BP that resulted from a Gulf of Mexico oil spill and their $500 million settlement with UBS bank over interest rate manipulation were specifically labeled punitive, so they could not be used as tax deductions.
"We are committed to ensuring that criminal resolutions have clear, unambiguous consequences for corporate wrongdoers. Criminal penalties are a price paid for bad behavior, and it isn't fair to get a break on that debt at the taxpayers' expense," said Assistant Attorney General Lanny A. Breuer in an email.
Goldman Sachs pays ahead of new tax punch
NEW YORK, Jan. 2 (UPI) -- Goldman Sachs Group said it handed out shares to executives in December, dodging a tax hike in the process, The Wall Street Journal reported.
The Journal reported Wednesday that Goldman Sachs distributed 508,104 shares worth $64.8 million a month ahead of its normal compensation schedule. The shares were part of compensation for 2011, not for 2012, the bank said in a filing with the Securities and Exchange Commission.
Congress approved a tax bill Tuesday that will raise federal income tax for individual income over $400,000 and couples' income over $450,000.
Goldman's SEC filing said 48 percent of the shares handed out were withheld for tax payments.
The filing listed 10 top executives who received the shares, but a bank spokesman said, "The December delivery of shares went to a wider group of employees than the named executive officers."
The bank's Chairman and Chief Executive Officer Lloyd Blankfein posted a message on Twitter Wednesday saying the new tax agreement in Washington, "is a step forward to injecting growth and investor confidence in the U.S. Economy.
Blankfein was awarded 66,065 shares in the early pay package with 33,245 shares withheld for tax purposes, the Journal said.