U.S. stock benchmarks rose on Thursday for a third straight day, as lawmakers neared an agreement that would avert a debt-ceiling breach for at least two months.
Some investors attributed the market’s bullish complexion to optimism around job creation ahead of a closely watched labor-market report on Monday, which could influence markets for weeks to come.
- The Dow Jones Industrial Average closed up 337.95 points, or 1%, to 34,754.94.
- The S&P 500 climbed 36.21 points, or 0.8%, to 4,399.76.
- The Nasdaq Composite finished up 152.10 points, or 1.1%, at 14,654.02.
On Wednesday, the Dow scored its biggest intraday comeback since December, erasing a loss of nearly 460 points to end with a gain of 102 points, or 0.3%. The S&P 500 rose 0.4% and the Nasdaq Composite gained 0.5%.
What’s drove the market?
Stocks extended early gains after Senate Majority Leader Chuck Schumer, D-New York, said in a floor speech that top Democrats and Republicans in the chamber had reached an agreement to extend the debt ceiling through early December, and said that a deal could be completed “as soon as today.”
Treasury Secretary Janet Yellen had previously warned that a breach of the debt ceiling could occur Oct. 18 unless Congress took action.
Sen. Mitch McConnell, the minority leader and Kentucky Republican, had ended near-term worries around the debt ceiling on Wednesday by announcing that Republicans wouldn’t filibuster an increase. The move only gives two more months of breathing space, but lawmakers say that will provide enough time for crucial negotiations on spending to take place.
“Everyone blinked yesterday, as it became clear — once again — that the politicians, the Federal Reserve and the country’s business leaders will never allow the debt ceiling nonsense to threaten a U.S. default,” said Greg Valliere, chief U.S. policy strategist at AGF Investments, in a note.
On Wall Street, anticipation for Friday’s September jobs number grew as economists now expect that 500,000 new jobs were created for the month, an amount that would more than double the 235,000 job gain of August.
But some analysts are even more sanguine about Friday’s report.
“Expectations are for 500,000 jobs created in September’s nonfarm payroll report,” wrote OANDA’s Edward Moya in a note on Thursday. “But traders should not be surprised if that headline comes closer to a 1-million.”
At the same time, talks in Switzerland between U.S. and Chinese officials set the stage for reports that U.S. President Joe Biden and Chinese leader Xi Jinping will meet virtually before the end of the year. Hong Kong’s Hang Seng stock index surged 3.1%, its strongest one-day surge since July 29.
Energy prices also continued to cool off, reacting to Russian President Vladimir Putin’s statement that gas producer Russia would seek to stabilize prices. The lead U.K. natural-gas contract reversed an early fall to climb 2.3%.
“Investors welcomed positive talks in the U.S. about the debt ceiling while European traders were also pleased to see Russia offering its energy support to the Old Continent to mitigate the risk of a supply crunch,” said Pierre Veyret, technical analyst at ActivTrades.
In U.S. economic data, the Labor Department said weekly initial claims for unemployment benefits fell 38,000, to 326,000, in the week ended Oct. 2. The September employment report is due Friday morning.
U.S. stock indexes have been volatile in October on concerns about the federal debt ceiling and a rise in bond yields as inflation fears have grown while investors await the third quarter corporate earnings reporting season starting next week.
Which companies were in focus?
- Shares of Levi Strauss & Co. closed up almost 8.4% after the jeans company late Wednesday beat Wall Street estimates for the quarter and raised its outlook for the year.
- Twitter Inc. late Wednesday said it was selling MoPub, a mobile-ad network, for $1.05 billion in cash to marketing-software company AppLovin Corp. Twitter shares were up 4.4%, while AppLovin jumped 10.3%.
- Shares of Rocket Lab USA Inc. rose 10.4%, after an announcement late Wednesday that NASA signed on with the company to demonstrate the U.S. agency’s Advanced Composite Solar Sail System, or ACS3.
- Despite missing on revenue for the most recent quarter, investors looked through the smoke of cannabis firm Tilray and the stock was up 2.1%.
What did other assets do?
- The yield on the 10-year Treasury note rose 4.7 basis points to 1.571%. Yields and debt prices move in opposite directions.
- The ICE U.S. Dollar Index a measure of the currency against a basket of six major rivals, fell 0.07%.
- The U.S. oil benchmark closed down 0.97% on the New York Mercantile Exchange. Gold futures settled at $1,756.10 an ounce, down 0.3%.
- In European equities trade, the Stoxx Europe 600 jumped 1.6% and London’s FTSE 100 gained 1.3%.
- The Hang Seng Index jumped 3.1% in Hong Kong, while Japan’s Nikkei 225 gained 0.5%.
—Steve Goldstein contributed to this article.