NEW YORK — The “fiscal cliff” compromise, even with all its chaos, controversy and unresolved questions, was enough to ignite the stock market on Wednesday, the first trading day of the new year.
The Dow Jones industrial average careened more than 300 points higher, its biggest gain since December 2011. It’s now just 5 percent below its record high close reached in October 2007. The Russell 2000, an index that tracks smaller companies, shot up to the highest close in its history.
The reverie multiplied across the globe, with stock indexes throughout Europe and Asia leaping higher. A leading British index, the FTSE 100, closed above 6,000 for the first time since July 2011.
In the U.S., the rally was extraordinarily broad. For every stock that fell on the New York Stock Exchange, roughly 10 rose. Technology stocks rose the most. U.S. government bond prices fell sharply as investors pulled money out of safe-harbor investments. And the VIX, an index that measures investors’ expectations of future market volatility, plunged more than 18 percent to 14.68, the lowest close since October.
The very last week of each year and the first two days of the new year usually average out to a gain for U.S. stocks. But this year stood out.
From 2008 to 2012, the Dow rose an average of 93 points on the first trading day of the year, less than a third of Wednesday’s gain of 308.41. During that period the Dow fell on the first trading day of the year only once, in 2008.
Despite the euphoria, many investors remained cautious.
The deal that politicians hammered out merely postpones the country’s budget reckoning, they said, rather than averting it.
“Washington negotiations remind me of the Beach Boys song, ‘We’ll have fun, fun, fun ‘til her daddy takes the T-Bird away,” Jack Ablin, the chief investment officer of BMO Private Bank in Chicago, wrote in a note to clients.
“Nothing got solved,” added T. Doug Dale, the chief investment officer for Security Ballew Wealth Management in Jackson, Miss.
The Dow enjoyed big gains throughout the day, up by more than 200 points within minutes of the opening bell. It swelled even bigger in the final half hour of trading, and closed up 2.4 percent to 13,412.55.
The Standard & Poor’s 500 jumped 36.23, or 2.5 percent, to 1,462.42. The Nasdaq rose 92.75, or 3.1 percent, to 3,112.26.
The yield on the 10-year Treasury note rose sharply, to 1.84 percent from 1.75 percent. Prices for oil and key metals were up. The price of copper, which can be a gauge of how investors feel about manufacturing, rose 2.3 percent.
The gains persisted despite small reminders that there are still serious problems punctuating the world economy, such as middling growth in the U.S. and the still-unsolved European debt crisis. The government reported that U.S. builders spent less on construction projects in November, the first decline in eight months. And the president of debt-wracked Cyprus said he’d refuse to sell government-owned companies, a provision that the country’s bailout deal says it must at least consider.
Among stocks making big moves, Zipcar shot up 48 percent, rising $3.94 to $12.18, after the company said it would sell itself to Avis. Avis rose 95 cents to $20.77, or 5 percent.
Marriott rose 4 percent, up $1.52 to $38.79, after SunTrust analysts upgraded the stock to “buy.” Headphone maker Skullcandy dropped 13 percent, losing 99 cents to $6.80, after Jefferies analysts downgraded it to “underperform.”