U.S. stocks shook off their post-election slump Monday and recorded big gains. Investors appeared more optimistic about a deal to avoid a federal budget crisis and were encouraged by a pair of corporate earnings reports.

The Dow Jones industrial average climbed as much as 169 points. Just before noon EDT, it was up 161 points, or 1.3 percent, at 12,749. The Dow had slid 5 percent since Election Day.

President Barack Obama and leaders in Congress are in talks to avoid a "fiscal cliff" on Jan. 1, when tax increases and mandatory government spending cuts are set to take effect.