Closing Bell: Stocks Soar as Washington Hints at a Debt Ceiling Deal

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APTOPIX Wall Street (Specialists Gregg Maloney, Patrick Murphy and Glenn Carell, left to right, work at their post during the IP
Richard Drew/AP
Stocks soared Thursday after investors enthusiastically responded to news of a possible deal among Washington lawmakers to break an impasse that threatened to push the country into default.

The three most-followed indexes all rose about 2.2 percent: The Dow Jones industrial average (^DJI) surged 323 points to 15,126, the Standard & Poor's 500 index (^GPSC) rallied 36 points to 1,692 and the Nasdaq composite index (^IXIC) jumped 82 points to 3,760.

The surge broke a three-week funk in the stock market. Stocks have steadily declined since mid-September as Washington's gridlock got investors worried that the U.S. could default on its debt and wreak havoc on financial markets and the global economy.

A partial government shutdown has continued 10 days after congressional Republicans refused to pass a budget for the new fiscal year without an attachment to defund President Obama's health care law.

A deal between the two political parties couldn't come soon enough. Treasury Secretary Jack Lew has said the government will hit its borrowing limit on Oct. 17. That would leave the U.S. with enough cash to last just a week or two before a default became a real risk.

In another bullish signal, small-company stocks rose even more than the rest of the market. Those stocks tend to be riskier than large, well-established companies but can also offer investors greater rewards. A sharp increase in small-company stocks means investors are more comfortable taking on risk. The Russell 2000 index (^RUT) jumped 24.4 points, or 2.3 percent, to 1,067.86. The Russell is just 19.57 points below its all-time high of 1,087.43, which it reached Oct. 1.

In commodities trading, the price of benchmark crude oil for November delivery rose $1.40, or 1.4 percent, to $103.01 a barrel, while gold lost 21.90, or 1.7 percent, to $1,285.00 an ounce.

In corporate news, Best Buy (BBY) shares jumped 7.6 percent to $39 on heavy volume. The electronics retailer is about to debut a trade-in promotion program where customers can swap an old smartphone for a $100 gift card that can be used to buy the new Apple (AAPL) iPhone 5s and 5c.

More Stocks in the News:
  • Shares of Stonegate Mortgage rose 14 percent to $18.25 in their trading debut Thursday, after the home lender raised nearly $114 million in its initial public offering. The Indianapolis-based company priced its offering of 7.1 million shares at $16 a share. That's below the range of $20 to $22 a share that it expected.
  • Lindsay Corp. (LNN) fell 5.9 percent to $75.35 after posting earnings fell short of market expectations. The irrigation equipment maker reported a 19 percent jump in fourth-quarter net income on improved revenue but analysts were anticipating earnings of 91 cents a share on revenue of $155.7 million for the quarter.
  • L Brands (LTD) fell 4.1 percent to $56.60 after reporting sales at stores open at least a year climbed 1 percent in September, but the results fell short of Wall Street expectations. The Columbus, Ohio, company, which owns Victoria's Secret, Bath & Body Works and other brands, also said it plans to sell $500 million in new debt.
  • Teva Pharmaceuticals (TEVA) rose 3.6 percent to $40.59 after the generic drug maker announced it was cutting its workforce by 10 percent.
  • Ruby Tuesday (RT) plunged 17.1 percent to $6.26. The restaurant chain reported a wider first quarter loss than expected, citing increased competition a difficult economic climate.
  • Citrix Systems (CTXS) slumped 11.9 percent to $58.75 after the company warned investors that its third-quarter revenue and profit will miss Wall Street expectations.
  • Shares of Invesco (IVZ) rose 5.5 percent to $33.92 a day after the investment management company reported a 9.1 percent yearly jump in the amount of funds it manages. As of Sept. 30, Invesco had $745.5 billion in assets under management.
  • Aruba Networks (ARUN) shares jumped 6.4 percent to $19.38 after it said that it plans to buy back up to $100 million additional shares of its stock.
  • Shares of Gilead Sciences (GILD) advanced 6.5 percent to $62.74 after the company reported successful results from a trial of an experimental cancer drug.
What to Watch Friday:
  • The University of Michigan releases its initial survey of Consumer Sentiment for October at 9:55 a.m. Eastern time.
Note: The government shutdown has caused delays in various reports due out by the Labor and Commerce departments.

These major companies are scheduled to report quarterly financial results before U.S. markets open.
  • JPMorgan Chase (JPM)
  • Wells Fargo (WFC)
-Compiled from staff and wire reports.


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9 Comments

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k4jlp

Funny how the people who can 'spook" the "market" can profit from it by their words on CNN. How do I get in on the game?

October 11 2013 at 10:48 AM Report abuse rate up rate down Reply
ggschk

:[ ............What's the point........... Our Country has crossed the point of no return.....We will never be able to control our debt.... How many times have both sides postured and eventualy caved in to raising the ceiling on our debt limit.......We are at 17 trillion why not just go for broke and raise the damm limit to 10 trillion ?? What does it matter our Country is screwed !........The Country just keeps voting in the same official's over and over agin..............:[

October 11 2013 at 10:46 AM Report abuse +1 rate up rate down Reply
EzinWy

The debt balloon continues to get bigger and at some point it will \'pop\' ! The game is not to be holding government debt that is due in a default. The question is - Is the United States too big a \'business\' to let default ? The answer is - it\'s only a matter of time.

October 10 2013 at 11:40 PM Report abuse +1 rate up rate down Reply
pdbliz

I could care less about it...
Sat, wife and I ,,taking camper up Blue Ridge Parkway,,,,,Turn off computer,,,radio...
WHAT HAPPENS ,,,HAPPENS.!!!!!

October 10 2013 at 11:06 PM Report abuse +4 rate up rate down Reply
Sam

The market ups and downs have nothing to do with the congress and their momentary impulses. It has everything to do with making money any time and any way you can. Period.

October 10 2013 at 9:07 PM Report abuse +1 rate up rate down Reply
hillchas

Stocks will crash on Friday mourning because Obama and Reid are completely un reasonable.

October 10 2013 at 8:50 PM Report abuse +2 rate up rate down Reply
pdbliz

Wolfe,,,,,,YOU SAID THE TRUTH ONE TIME,,,AND,,,GOT HAMMERED,,

October 10 2013 at 6:04 PM Report abuse -1 rate up rate down Reply
sdwood

I can say I do not know that much about the stock market but if it goes up this much, does that mean someone made a lot of money on theie stocks ?? Could this issue with the debt ceiling be a direct cause by someone to effect the market to make a lot of money ? Just a question..

October 10 2013 at 5:53 PM Report abuse +4 rate up rate down Reply
1 reply to sdwood's comment
pdbliz

YES,,,,,,,THIS is all a game played by ,,,rich and Washington....
The sad thing,,,,the little people get the hit.!!!!!!
ALL SMOKE AND ROSES...........

October 10 2013 at 5:57 PM Report abuse +1 rate up rate down Reply
1 reply to pdbliz's comment
analyst0042

Wow...I had no idea I am the rich!
I just paid attention to the action in the far east markets and in Europe overnight and bought an ETF as soon as the market opened and made enough money in one day to pay for a nice European vacation. It does not take much..just be aware of whats going on in front of your eyes.

October 10 2013 at 6:02 PM Report abuse rate up rate down