U.S. stocks surged, as benchmark indexes jumped the most since January, as lawmakers moved toward an agreement to increase the debt ceiling and avoid a default.
The Standard & Poor’s 500 Index added 2.2% to 1,692.56 at 4 p.m. in New York. The Dow Jones Industrial Average advanced 323.09 points, or 2.2%, to 15,126.07. Both gauges had their largest climbs since January 2. About 6.5 billion shares changed hands on U.S. exchanges, 12% higher than the three-month average.
“You’re taking the nuclear option off the table, the fact that we’ll blow through the debt ceiling, that’s not going to happen,” Dan Veru, the chief investment officer who helps oversee $4.5 billion at Palisade Capital Management LLC, said in a phone interview for Bloomberg. “This continues to put pressure on lawmakers to get a deal done because they’re seeing that just in fact talking is what markets want them to do”, he said.
The sharp advance was came as a reaction to a House Republican proposal for a short-term increase in the debt ceiling that would reduce the probability for a U.S. default. The plan would push the lapse of U.S. borrowing authority to November 22 from October 17. However, it wouldnt end the 10-day-old partial shutdown of the federal government.
White House press secretary, Jay Carney said that President Barack Obama would support a short increase in the U.S. debt limit with no “partisan strings attached,” as the proposal would be voted today.
The market has been reacting very emotionally according to some analysts. All 10 S&P 500 industries gained at least 1.4%. Companies whose earnings are most tied to economic swings led the gains.
In corporate news, Wells Fargo surged 2.7% to $41.44 while JP Morgan added 3.5% to $52.52.
Netflix Inc. added 5.4% to $303.99, compensating a three-day slide. Laura Martin, an analyst with Needham & Co., started coverage of the stock with a “buy” rating and said the video service provider has the ability to boost subscription prices.
Time Warner Cable Inc. jumped 6.1% to $116.95. The cable company and Univision Communications Inc., a media group that caters to Hispanic Americans, agreed to extend their partnership and deliver more content to Time Warner subscribers.