After the President announced his intentions to trim the deficit by $4 trillion the Dow Jones rose 7 points, and the Nasdaq gained 17 points.
Despite a strong open -- thanks to better-than-expected earnings and revenue from JPMorgan Chase (JPM, Fortune 500) -- stocks spent the early part of Wednesday's session in the red.
The losses came after JPMorgan CEO Jamie Dimon said that mortgage-related losses would continue for some time, and warned that investors should not expect additional dividend increases beyond the 25 cents set for this quarter. Shares of the bank slid almost 1%. JPMorgan is the first major bank to report first-quarter results.
But the market again reversed course in the afternoon after Obama laid down a series of spending and deficit targets, adding that he wants $3 in spending cuts for every $1 in additional tax revenue.
"Investors wanted to see some movement toward fiscal responsibility, but just not too much and not too soon, and that's exactly what the president gave them," said Doug Roberts, chief market strategist at Channel Capital Research.
Roberts added that the market has been supported by the government's stimulative policies, including the Federal Reserve's Treasury purchases and Congress' decision last December to extend the Bush-era tax cuts.
"Investors are relieved to hear that Obama's plan to reduce the deficit is gradual, not imminent," Roberts said. "The government's deficit has been taking painkillers for years now, and it's finally about to get some surgery. But nobody's amputating anything."