US stocks rebound as investors eye an end to the budget impasse
Stocks on the American exchange surged after their worst two-day performance in several months earlier in the week, as lawmakers mobilized to end the first partial government shutdown in 17 years.
Signs emerged lawmakers could end the budget impasse and avoid a devastating default one day after House Republicans sent a small delegation of negotiators to the White House. “The feeling is that they’re starting to get some compromise movement toward the middle,” said John Fox of Fenimore Asset Management Inc.
The US government is entering its 11th day of a partial shutdown, and is less than a week away from exhausting its borrowing authority. The Treasury Department warned not raising the debt ceiling before the October 17 deadline would be “catastrophic,” and could lead to a decades-long financial crisis. The government closure has disrupted the flow of economic data over the past ten days, making it more difficult for the Federal Reserve to evaluate the nation’s economic performance.
The Standard & Poor’s 500 soared more than 2.1 percent to 1,692.56, the biggest single day rally since January, when the benchmark gauge set a new record high on the heels of the latest FOMC policy decision. The Dow Jones Industrial Average jumped more than 323 points to 15,126.10, with all of its 30 members reporting gains. The Boeing Company (NYSE:BA) , UnitedHealth Group (NYSE:UNH) and Dow newcomer Nike (NYSE:NKE) led all gainers, jumping at least 3.6 percent.
The NASDAQ Composite recovered 83 points to 3,760.75 as the technology sector rebounded. Facebook (NASDAQ:FB) shares jumped more than 4.8 percent after a massive selloff earlier in the week, triggered by a downgrade of the company stock. Microsoft (NASDAQ:MSFT) jumped more than 2 percent after the company’s Board of Directors said it’s working on hiring a new CEO this year.
With the week quickly drawing to a close, weekend negotiations to end the budget impasse will test lawmakers’ resolve. Republicans and Democrats remain at odds over President Barrack Obama’s landmark Affordable Care Act, which promises to initiate a major paradigm shift in US health policy.
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