U.S. stocks rally as fiscal drama nears end
S&P 500 index 0.2% shy of record; Nasdaq Composite ends at 13-year high
NEW YORK (MarketWatch) — U.S. stocks surged on Wednesday, lifting the S&P 500 near its record, as the Senate reached an agreement to reopen the government and raise the debt ceiling, with votes later in the day expected to end the fiscal standoff.
A major factor in helping equities withstand the latest Washington drama is the Federal Reserve’s September decision not to begin reducing its $85 billion in monthly asset purchases. “They look almost clairvoyant in their call not to taper; they saw the debate getting nasty in Washington,” Jim Russell, regional investment director for US Bank Wealth Management in Cincinnati, said of the political battle that started with a GOP effort to defund health-care legislation passed in 2010.
The bipartisan agreement would fund the federal government through Jan. 15 and raise the debt ceiling through Feb. 7, according to a Senate Democratic aide. Both the House and the Senate still need to vote on the measure, with would bring an end to the partial government shutdown now in a 16th day.
“It appears that risk assets are anticipating a conclusion to the uncertainty, which is always a positive for the capital markets. The markets are cheering not only the removal of uncertainty, but the possibility of two positives down the road: number one is deficit reduction and number two is the possible removal of sequestration cuts. Perhaps some more thoughtful deficit-reduction techniques would be in play,” said Russell.
Just 4 points, or 0.2%, from its Sept. 18 record close, the S&P 500 index (SNC:SPX) climbed 23.46 points, or 1.4%, to 1,721.52, with financials and health care pacing gains among its 10 major industry groups.
The Dow Jones Industrial Average (DJI
JIA) climbed 205.82 points, or 1.4%, to 15,373.83, with J.P. Morgan Chase & Co. (NYSE:JPM) leading gains that included all but three of its 30 components.
The Nasdaq Composite (NASDAQ:COMP) gained 45.42 points, or 1.2%, to 3,839.43, its highest close since Sept. 8, 2000.
Shares of Bank of America Corp. (NYSE:BAC) climbed 2.3% after the company reported a third-quarter profit of $2.22 billion versus a loss in the year-earlier period.
Stanley Black & Decker Inc. (NYSE:SWK) declined 14% after the tool maker reduced its outlook for the year.
For every stock falling, four gained on the New York Stock Exchange, where more than 750 million shares traded. Composite volume cleared 3.5 billion.
Late Tuesday, Fitch Ratings warned it might downgrade the sovereign credit rating of the U.S. from AAA as a result of the standoff over the nation’s debt limit.
“The scariest thing about this episode was the lack of understanding by some in Congress of the consequences of going into default. Just as disturbing are those in the public who backed them and did not understand the ramifications,” Elliot Spar, market strategist at Stifel Nicolaus & Co., noted in afternoon commentary. http://www.marketwatch.com/story/stocks-surge...=afterbell
