- POSTED: 11 Oct 2013 05:53
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US stocks surged Thursday on progress toward a potential deal in Washington to prevent a debt default, recovering a hefty portion of their losses since the partial government shutdown began.
NEW YORK CITY: US stocks surged Thursday on progress toward a potential deal in Washington to prevent a debt default, recovering a hefty portion of their losses since the partial government shutdown began.
The Dow Jones Industrial Average soared 323.09 (2.18 per cent) to 15,126.07, just below its level on the eve of the October 1 shutdown.
The broad-based S&P 500 jumped 36.16 (2.18 per cent) to 1,692.56, while the tech-rich Nasdaq Composite Index added 82.97 (2.26 per cent) at 3,760.75.
A breakthrough in the political logjam seemed at hand when House of Representatives Speaker John Boehner offered to extend the US borrowing authority for six weeks. But his proposal would not end the shutdown.
President Barack Obama met with Republican leaders at the White House.
The developments suggest "both sides appreciate the gravity of a default," said Jack Ablin, chief investment officer at BMO Private Bank.
"It's not worth sending our country into a tailspin over ideological differences. I think investors are breathing a sigh of relief."
Some of the biggest gains came in technology stocks that had retreated in recent days.
Facebook rose 4.9 per cent, Netflix jumped 5.4 per cent, Amazon increased 2.3 per cent and Dow component Microsoft advanced 2.1 per cent.
Banking stocks, which have suffered amid concerns the Washington impasse could harm the economy, also scored outsized gains.
Dow component JPMorgan Chase surged 3.5 per cent, Wells Fargo jumped 2.7 per cent and Citigroup tacked on 2.8 per cent.
JPMorgan and Wells Fargo will report earnings Friday in some of the quarter's earliest major results.
Oil giant Chevron, another Dow component, underperformed the index, rising just 0.2 per cent after disclosing that quarterly earnings would be lower than the previous quarter, in part due to "significantly" lower downstream earnings.
Morgan Stanley slashed its earnings estimate to $2.60 per share from $2.95.
Citrix, which provides cloud computing services, stood out in falling 11.9 per cent after warning that both earnings and revenues lagged expectations.
The company forecast revenues of $710-$712 million, below the previous projection of $730-$740 million.
Bond prices fell. The yield on the 10-year US Treasury rose to 2.68 per cent from 2.65 per cent Wednesday, while the 30-year increased to 3.74 per cent from 3.72 per cent.
Prices and yields move inversely.