Thursday October 7, 2021

// October 7th, 2021 // Daily News

MARKETS

Stocks rally on hopes Congress will avert government shutdown, Dow rises 300 points

Stocks jumped on Thursday, continuing Wednesday’s midday comeback, as Congress appeared to near a deal that would raise the debt limit in the short term and avoid a disastrous government default.

The Dow Jones Industrial Average rose 350 points, or 1%. The S&P 500 gained 0.9% and the Nasdaq Composite jumped 1%.

A broad range of stocks were higher in premarket trading. Tech shares Twitter, Nvidia and AMD were more than 1% higher. GM and Southwest Airlines also rose. Costco shares added 1% after reporting better-than-expected September sales. Facebook gained after JPMorgan said it was time to buy the recent dip on the stock.

On Tuesday, Treasury Secretary Janet Yellen had warned that they U.S. should “fully expect” a recession if Congress couldn’t reach an agreement on the debt ceiling, leading to an unprecedented government default. Then during the trading day Wednesday, Senate Minority Leader Mitch McConnell offered a short-term suspension proposal to Senate Democrats. They were likely to accept the deal that would raise the debt ceiling by a specific amount and allow the government to keep operating until some point in December.

“A temporary deal should help reduce debt ceiling related market volatility over the next few weeks as attention shifts towards December,” wrote Mark Haefele, chief investment officer of global wealth management at UBS.

Following the news on Wednesday, the Dow reversed and ended more than 100 points higher. The S&P advanced 0.4%, after falling as much as 1.27%. The Nasdaq Composite rose 0.5%, after dropping as much as 1.2%.

“While we believe a debt ceiling deal will get done, politicians may need some market ‘motivation.’ This could keep near-term volatility elevated,” said Christopher Harvey, senior equity analyst at Wells Fargo Securities. “We view yesterday’s offer from Senate GOP leadership not as a durable solution, but rather as an invitation to stave off a potentially immediate disaster — a small positive.”

Weekly jobless claims fell sharply last week as the enhanced unemployment benefits ended, the Labor Department reported Thursday. Initial filings for unemployment benefits totaled 326,000 for the week ended Oct. 2, below the 345,000 Dow Jones estimate and a drop from the previous week’s 364,000.