Stocks End Higher After Debt-Limit Extension Deal

All three major indexes are up for the week

By Caitlin Ostroff and Michael Wursthorn

Oct. 8, 2021



Major U.S. stock indexes rose Thursday after Senate Majority Leader Chuck Schumer said lawmakers had reached a deal on a short-term debt-limit extension, potentially putting off a government default standoff for a couple of months.

Stocks rallied following Sen. Schumer’s remarks from the Senate floor before closing below their session highs. While the Senate must still vote on the deal, investors appeared ready to remove the debt ceiling as an obstacle to further gains. Shares of technology companies, energy firms and others were up.

“Right now, there are loads of fears out there. It just takes a couple of positive developments and suddenly that picture changes,” said Lewis Grant, an equities portfolio manager at Federated Hermes.

Fresh figures showed that 326,000 Americans applied for first-time unemployment benefits in the week ended Oct. 2, down from 364,000 the week prior, further boosting investor sentiment.

The Dow Jones Industrial Average rallied 337.95 points, or 1%, to 34754.94. The S&P 500 added 36.21 points, or 0.8%, to 4399.76. The Nasdaq Composite rose even higher as technology stocks recouped recent losses, lifting the benchmark up 152.10 points, or 1%, to 14654.02

Thursday’s gains put stocks on firm footing for the week. All three major benchmarks are up at least 0.6% over the past four trading days. That marks a full recovery from Monday losses, when a selloff in Facebook stock and shares of other big technology companies rippled through the market.

“A temporary deal should help reduce debt-ceiling related market volatility over the next few weeks as attention shifts toward December,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note to clients.

On Thursday, technology and other growth stocks rallied. Shares of Apple added $1.29, or 0.9%, to $143.29, while Google parent Alphabet rose $33.20, or 1.2%, to $2,784.50. Twitter rose even higher, adding $2.68, or 4.4%, to $63.97. The company said Wednesday it would sell mobile ad firm MoPub to Applovin for $1.05 billion.

Cyclical stocks also moved higher, showing investors’ willingness to snap up stocks at large. General Motors advanced $2.51, or 4.7%, to $56.44, while Ford Motor rose 77 cents, or about 5.4%, to $14.89.

Energy stocks also posted decent gains, coinciding with a brief slide in commodity prices. U.S. stockpiles grew more than expected and Russian President Vladimir Putin said Wednesday that Moscow was ready to work on stabilizing the global energy market. Schlumberger rose $1.08, or 3.6%, to $31.02, while Marathon Oil added 27 cents, or 1.8%, to $15.36.

Financial stocks rose 0.6%, and bond yields continued to creep up. The yield on the benchmark 10-year Treasury note rose to 1.570% Thursday from 1.524% a day earlier. Yields and prices move inversely.

In Europe, the pan-continental Stoxx Europe 600 index jumped 1.6%, with gains led by the basic resources and auto sectors.

Indexes in Asia also closed higher. Hong Kong’s Hang Seng climbed 3.1%, led by gains in technology companies. Shares of Chinese Estates (Holdings) rose 32% in Hong Kong on Thursday after its majority shareholders offered to take the company private. The group is a major shareholder of embattled property giant China Evergrande Group.

South Korea’s Kospi rallied 1.8%. The Nikkei 225 added 0.5%.