U.S. Stocks Rise on Optimism Lawmakers Will Reach Deal

by **Cals** Wed 16 Oct 2013, 23:08

U.S. Stocks Rise on Optimism Lawmakers Will Reach Deal
By Alexis Xydias & Nick Taborek - Oct 16, 2013 10:40 PM GMT+0800

U.S. stocks gained, sending the Standard & Poor’s 500 Index (SPX) toward a record, amid speculation lawmakers were making progress toward an agreement on raising the debt limit before tomorrow’s deadline.

All 10 main industries in the S&P 500 gained at least 0.5 percent, with financial shares advancing the most. Bank of America Corp. jumped 1.8 percent as lower legal expenses and loan losses helped profit rebound. Yahoo! Inc. and Mattel Inc. increased at least 0.8 percent after reporting earnings that topped analyst estimates.

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3:20

Oct. 16 (Bloomberg) -- Wilbur Ross, chairman of WL Ross & Co., talks about the outlook for U.S. debt-ceiling negotiations and the economy. Ross speaks with on Bloomberg Television's "In the Loop." (Source: Bloomberg)

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2:49

Oct. 15 (Bloomberg) -- House Minority Leader Nancy Pelosi, a Democrat from California, talks about the outlook for an agreement avoiding a U.S. debt default and ending the partial government shutdown, following a meeting between House Democrats and President Barack Obama. House Minority Whip Steny Hoyer also speaks. (Source: Bloomberg)
The S&P 500 rose 1 percent to 1,715.75 at 10:38 a.m. in New York. The benchmark gauge slid 0.7 percent yesterday after rallying 3.3 percent over the previous four days. The Dow Jones Industrial Average gained 158.30 points, or 1 percent, to 15,326.31 today. Trading in S&P 500 stocks was 22 percent above the 30-day average at this time of day.
“Investors are relieved that it looks like we’re not going to go over the cliff,” Ben Hart, a research analyst at Radnor, Pennsylvania-based Haverford Trust Co., which oversees about $6 billion, said by phone. “It takes the worst case scenario off the table.”
The S&P 500 has advanced 2.1 percent this month even as Congress failed to agree on a federal budget, forcing the first partial government shutdown in 17 years. The gauge is within 10 points of its all-time high of 1,725.52 reached Sept. 18.
Debt Limit
Equities extended gains today as Representative Kevin Bradyof Texas, a senior House Republican, said House SpeakerJohn Boehner will allow a vote on a Senate agreement to end the government shutdown and extend U.S. borrowing authority.
“The speaker will bring that agreement to the House floor in a very timely manner,” Brady said on Bloomberg Television today. He said he thinks the measure would pass.
House leaders haven’t decided whether they will vote before the Senate, said a Republican aide who spoke on conditions of anonymity. For procedural reasons, if the House goes first, the bill could reach President Barack Obama’s desk more quickly.
With no deal, the U.S. would exhaust its borrowing authority tomorrow and the government may start missing payments at some point between Oct. 22 and Oct. 31, according to theCongressional Budget Office. Fitch Ratings put the world’s biggest economy on watch for a possible credit downgrade yesterday, citing lawmakers’ inability to agree.
“Reaching a broad agreement aside, there are still a few hoops to go through before it can be considered a done deal,” Jim Reid, a strategist at Deutsche Bank AG, wrote in e-mailed comments. “All eyes clearly will be on this today as we await for further developments fromCapitol Hill.”
The Federal Reserve is scheduled to release its Beige Book of current economic conditions today.
Earnings Season
Some 22 companies in the S&P 500 are due to post results today. Profits for companies in the index probably increased 1.4 percent during the third quarter while sales rose 2 percent, according to analysts’ estimates compiled by Bloomberg.
The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, dropped 14 percent to 15.97, after surging 16 percent yesterday for the biggest gain since June 20.
All 10 S&P 500 groups rose, with financial, health-care and energy companies rallying more than 1.1 percent.
Bank of America jumped 1.8 percent to $14.49. Chief Executive Officer Brian T. Moynihan, 54, has said the “lion’s share” of costs tied to disputed mortgages are behind his bank after booking more than $45 billion tied to his predecessor’s 2008 takeover of Countrywide Financial Corp.
Yahoo, Mattel
Yahoo, the biggest U.S. Web portal, advanced 0.8 percent to $33.66 as an influx of advertising dollars helped boost turnaround efforts by CEO Marissa Mayer.
Mayer, who took the helm of the largest U.S. Web portal in July 2012, is investing in product improvements to woo more users and marketers amid competition from Google Inc. and Facebook Inc.
Mattel (MAT) climbed 4.1 percent to $43.27. The world’s largest toymaker topped estimates as sales of Barbie and American Girl gained. The company has been trying to boost sales amid lackluster growth of the toy industry in the U.S., the company’s largest market, as kids spend more time using electronic devices.
Abbott Laboratories jumped 6 percent to $35.73 for the biggest gain in the S&P 500. The provider of health-care diagnostics and medical devices reported third-quarter results that surpassed analyst estimates and raised its dividend by more than half. Revenue rose 2 percent to beat company estimates on increased demand for diagnostic tests. Abbott spun off its drug business into a new company earlier this year.
Stanley Black & Decker Inc., the maker of power tools and electronic security systems, tumbled 15 percent to $76.47 for the largest drop in the S&P 500. The company cut its full-year earnings outlook on slower-than-anticipated improvement in margins in its security business and weakness in emerging markets, as well as uncertainty created by the U.S. government shutdown.
To contact the reporters on this story: Alexis Xydias in London at [You must be registered and logged in to see this link.]; Nick Taborek in New York at [You must be registered and logged in to see this link.]
To contact the editors responsible for this story: Andrew Rummer at [You must be registered and logged in to see this link.]; Lynn Thomasson at [You must be registered and logged in to see this link.]
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