Wall Street surges as worries over debt ceiling subside

(Reuters) -U.S. stocks climbed on Thursday in a broad-based rally led by heavyweight technology stocks, after a temporary truce in the debt-ceiling standoff in Congress relieved concerns of a possible government debt default later this month.

A specialist trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 6, 2021. REUTERS/Brendan McDermid

U.S. Senate Majority Leader Chuck Schumer announced Senate leaders have agreed to raise the Treasury Department’s borrowing authority until early December, with a possible vote for a debt limit increase of $480 billion coming as soon as Saturday.

“Today’s (market) is driven by a slight move in Washington towards rationality about being able to pay their bills, write some checks,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.

Mega-cap stocks were back in action – Microsoft Corp, Apple Inc, Amazon.com Inc and Alphabet Inc rose between 1% and 1.8%, providing the biggest boost to the S&P 500 and the Nasdaq.

All of the 11 major S&P 500 sectors advanced, with eight of them jumping more than 1%. Materials was the biggest gainer, up 2%, followed by healthcare and consumer discretionary.

The CBOE volatility index, also known as Wall Street’s fear gauge, fell to its lowest level since Sept. 24.

At 11:51 a.m. ET, the Dow Jones Industrial Average was up 512.92 points, or 1.49%, at 34,929.91, the S&P 500 was up 61.61 points, or 1.41%, at 4,425.16, and the Nasdaq Composite was up 243.65 points, or 1.68%, at 14,745.56.

Wall Street’s main indexes are now set for weekly gains, recovering from bouts of selling pressure in heavyweight high-growth stocks earlier in the week when Treasury yields soared on expectations of persistent elevated inflation.

“I’m not worried about the markets in the near term. You’ve seen these pretty severe corrections which offer buying on the dip opportunity,” said Greg Swenson, founding partner of Brigg Macadam.

Meanwhile, data showed fewer-than expected Americans filed new claims for jobless benefits last week. It also showed layoffs increased from a 24-year low in September.

This comes after a survey from the ADP National Employment Report showed a strong increase in private payrolls in September and ahead of the more comprehensive non-farm payrolls data due on Friday. It is expected to cement the case for the Federal Reserve’s slowing of asset purchases.

“Those two bits of data fed into today’s good action because we’re expecting a pretty good number, but not a number so hot, that would force the Fed’s hand to really ramp up the taper. I think we’re going to get that Goldilocks number of employment,” Forrest said.

Levi Strauss & Co jumped 8.8% after the jeans maker beat third-quarter revenue and profit estimates, boosted by an uptick in demand for jeans as people refreshed their wardrobes.

Snap Inc gained 5.3% after launching an in-app tool to educate users about the dangers of drugs.

Advancing issues outnumbered decliners by a 4.35-to-1 ratio on the NYSE and by a 3.93-to-1 ratio on the Nasdaq.

The S&P index recorded 30 new 52-week highs and three new lows, while the Nasdaq recorded 76 new highs and 51 new lows.

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