Matt Krantz, USA TODAY
Investors breathed a sigh of relief and pushed U.S. stock index futures sharply higher after lawmakers agreed late Tuesday on a deal to avert the 'fiscal cliff' of tax increases and spending cuts.
Without a deal, automatic spending cuts and tax hikes would have gone into effect, threatening the economy.
The deal doesn't end the battle between lawmakers, as Republicans have vowed to revisit more aggressive spending cuts as the need to boost the country's $16.4 billion debt ceiling looms in February.
Still, the agreement ends months of hand-wringing by investors who have feared that a failure by lawmakers would cause serious economic shock at a time when businesses are still slow to hire and profit growth is starting to sputter.
Without clarity on what tax hikes or government spending would be in 2013, companies and investors were unable to make accurate forecasts about the near-term future.
Investors around the world didn't wait for trading to start in New York to celebrate the news.
Major global indexes were sharply higher, including the Nikkei 225 and Hong Kong Hang Seng indexes, which added 0.7% and 2.1% respectively.
But the dollar weakened on the news. The Dollar Index, a measure used to gauge the value of the U.S. dollar vs. currencies of six other nations, fell 0.4% to 79.451.