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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19 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
justthe2ofus

:[ ............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
mac2jr

The '1, 2, 3 Movement'© asks Can Washington be Fixed?

Now there is a question for you, the trillion dollar question. "Can Washington be Fixed" and the answer is "Yes"; with the passing of one, two, or three very simple laws.

First law is that if any lawmaker gets in front of the camera and LIES to the American people, he or she is to be immediately dismissed from his or her position. This is at all levels of government, and covers people from all political parties. No recall elections, no second chances, no bull, FIRED.. and he or she loses his or her pension and benefits as well.

Second law is that all laws MUST have a Sunset Clause. This says that after a period of time the law must be looked at, evaluated as to value and cost to value ratio, and then either voted to be continued or voted to be ended. We have laws on the books that date back over two hundred years, and every time we try to pass a new law to represent "today's" values and conditions, a battery of very high paid attorneys have to research millions of pages of what should be obsolete laws to make sure that there are no conflicts. This is a waste of taxpayer money.

Third law is that all Bills put to Congress be 'ONE-SUBJECT' Bills; ending the "I'll vote for your BS if you vote for my BS" system that is currently predominate in Congress. The current September 2013 battle going on in Congress is due to there NOT being a One-subject Bill, and although the Bill is needed, required, to keep the Government open, the 'attachments' for defunding health care, ending some women's rights, etc., that are attached is causing major problems.

So, it is a simple as 1, 2, 3 to end this mess at all levels of government, now all we need is a government willing to self-regulate and pass the "1, 2, 3 movement ©"

October 11 2013 at 3:00 AM Report abuse -1 rate up rate down Reply
mac2jr

Getting the U.S.A. Deficit down

Yes, the American People are nearly $17 trillion dollars or $50,000 per person in debt, but to whom? Most of this debt is to ourselves; about one-third of the Federal debt is owed to about 230 Federal agencies. Foreign ownership is in the form of Foreign Investments in America through bonds and treasury notes, and is equal to about 47% of the total. These are at present not being 'called-in' and therefore are not harming the U.S.A. with the exception of the accrued interest.

So, how to get out of this?

First would be to actually collect enough money, through taxes and fees, to cover the cost of running the government and paying the creditors and the investors. This has been soundly rejected by many in Congress.

Second would be to cut expenses by laying off workers, killing social networking programs, and refusing to fix all the infrastructure problems. This has been the cause of many in Congress.

Third would be to do an across the board cut of 10% to all government, good programs as well as the bad. This is being done at the present.

Fourth would be to default on our obligations as some in Congress seem to want. This would prevent future investment in the U.S.A. by most foreign countries and probably result in a failed economy.

Fifth would be to dissolve our currency, change the currency, and tell all creditors that the U.S.A. is in bankruptcy and will no longer honor any currency that was not within the country at the time of the conversion. We have done this once or twice in our history's past.

Sixth would be to go to a 100% pay as you go system, a National Sales Tax in lieu of an Income Tax, this would be overbearing on the poor and actually help the rich that do not invest in U.S.A. products and services. This has been proposed and rejected many times, but due to things like home generated electricity and electric cars, may be proposed in limited ways. Example, remove the gasoline tax and by using Vehicle Registrations or GPS surveillance charge owners on a Per Mile Driven basis, this is on the table in many states right now.

Seventh would be to invest in America. Add a set fee to all new and renewed business licenses and corporate charters, this would be used to offset the damage done to our highways, pay for our corporate protections (police and military, etc.), pay for cleanup of our corporate ruined environment, and pay for college or technical school education for everyone that wants or need it.

In addition, for a period of a decade, all of the top 20%'ers would pay 85% tax on all earnings, and this includes foreign earnings. These are the people that have benefited from decades of low tax rates, allowance to destroy our infrastructures, allowance to pollute our environment, and allowance to use our labor force and natural resources for their personal gains.

October 11 2013 at 3:00 AM Report abuse -2 rate up rate down Reply
mac2jr

Some will say that the top 20% pay up to 40% of the cost of running government now, but one also has to understand that this group also controls 40% of the nation's wealth, thus should be paying.

The only way out of our nation's economic problems and reduce the Nation's Debt, is to increase taxes and invest in ourselves, in America. Investments in education, resources, technology, transportation, etc., will allow us to GROW out of the situation. This plan worked after WWI, after WWII, during the Eisenhower and Kennedy era's, and at the beginning of the Obama Presidency, we need to DO IT.

Invest in America, not war, not foreign products and services, not failure

October 11 2013 at 2:59 AM Report abuse -1 rate up rate down Reply
mac2jr

To CNN:

"Now as a Reporter, you owe me and all Americans the Truth, and truthful reporting; which frankly you are NOT providing. Ted Cruz is causing trouble for one reason, he wants to run for president and needs money from his Tea Party (Texas Businessmen) backers. NO OTHER REASON..."

"The scandals against the Obama Administration and the State Department is a Republican move to make sure that Hilary Clinton and Mr. Kerry cannot run in the next Presidential Elections, NO OTHER REASON..."

"Now, I watch CNN from 6am to 12pm, but really am getting disappointed in your newscast that are allowing Liar's to LIE constantly to the American Public and me, 24/7 without being called out on their LIES.. Tex Cruz, Boehner, and dozens of other Republicans have been on CNN and each, without exception, has OUTRIGHT LIED to the CNN news anchors and the American Public, and NONE has been CALLED on his or her LIES. WHY..??? "

October 11 2013 at 2:58 AM Report abuse 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
1 reply to EzinWy's comment
mac2jr

Do you know who the money is owed to?

October 11 2013 at 2:49 AM Report abuse -2 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
1 reply to Sam's comment
mac2jr

Total crap-shoot and rigged to the hilt.

October 11 2013 at 2:49 AM 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
1 reply to hillchas's comment
mac2jr

You like that fact that the Tea Party is blackmailing both the Republican and the Democrat parties?

October 11 2013 at 2:50 AM Report abuse -2 rate up rate down Reply
1 reply to mac2jr's comment
hugh_geenormous

Blakmailing? How so?

October 11 2013 at 11:43 AM Report abuse rate up rate down