S&P 500 Has Best Final-Day Rally Since 1974 on Budget

U.S. stocks surged on the last day of the year by the most since 1974 as Congress neared a deal to avert more than $600 billion in tax increases and spending cuts.

Hewlett-Packard Co. and Caterpillar Inc. jumped more than 3.2 percent. Investors bought shares of companies most tied to economic growth, sending technology, energy and materials stocks at least 2 percent higher. Facebook Inc. climbed 2.7 percent after Bank of Montreal raised its rating on the company to outperform from underperform.