Closing Bell: Stocks Soar as Washington Hints at a Debt Ceiling Deal
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.
%VIRTUAL-article-sponsoredlinks%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.
- The University of Michigan releases its initial survey of Consumer Sentiment for October at 9:55 a.m. Eastern time.
These major companies are scheduled to report quarterly financial results before U.S. markets open.