NEW YORK - US stocks jumped the most since January and Treasury bill rates tumbled on optimism lawmakers will reach agreement to raise the debt ceiling and avoid a default. Gold fell while oil rallied.
The Standard & Poor's 500 Index soared 2.1 per cent at 3:13 pm in New York for the biggest advanced since Jan. 2. The Stoxx Europe 600 Index climbed 1.7 per cent, rebounding from a one-month low. Rates on Treasury bills scheduled to mature on Oct. 17 dropped for the first time in six days. The dollar appreciated for a third day against the yen. Brent oil added 2.3 per cent after Libya's prime minister was detained and released.
The White House endorsed a short debt-limit increase with no policy conditions attached, signaling potential support for House Republicans' plan for a month-long reprieve from a default. Treasury Secretary Jacob J. Lew warned that "uncertainty" over the debt limit is starting to stress financial markets, speaking in testimony to the Senate Finance Committee a week before the government runs out of its borrowing authority on Oct. 17.
"You're taking the nuclear option off the table, the fact that we'll blow through the debt ceiling, that's not going to happen," Dan Veru, the chief investment officer who helps oversee $ 4.5 billion at Palisade Capital Management LLC, said. by phone from Fort Lee, New Jersey. "This continues to put pressure on lawmakers to get a deal done because they're seeing that just in fact talking is what markets want them to" do, he said.
House Speaker John Boehner's plan would push the lapse of US borrowing authority to Nov. 22 from Oct. 17, and wouldn't end the 10-day old partial shutdown of the federal government. Jay Carney, the White House press secretary, said President Barack Obama would support a short-term increase in the US debt limit with no "partisan strings attached," though he prefers a longer extension.
"The feeling is that they're starting to get some compromise movement toward the middle and that's positive," John Fox, a Cobleskill, New York-based fund manager and director of research at Fenimore Asset Management Inc., Which manages about $ 1.6 billion. , said over the phone. "If you get the debt ceiling settled, investors will focus on the potential economic growth for next year and what earnings can be for companies, which can increase from here.".