Wall Street Extends 2-Day Rally on Debt Deal Hopes

Nichole Harper
11 Oct, 2013
New York City

Market indexes extended rally for the second day in a row in New York on the debt deal and government funding hopes. White House rejected the latest short term debt ceiling revision proposal and the federal government is closed for the eleventh day.

[R]1:50 PM New York – Market indexes extended rally for the second day in a row in New York on the debt deal and government funding hopes. White House rejected the latest short term debt ceiling revision proposal and the federal government is closed for the eleventh day.[/R]

Investors bid up stocks for the second day in a row on the hopes that political leaders will avert default on October 17.

President Obama and House Republicans failed to agree on a six-week increase of U.S. debt ceiling but the latest proposal was viewed as a progress on Wall Street.

U.S. government has the largest debt of any nation in the world with $16.7 trillion and nearly $2.4 trillion of that is held by China and Japan.

U.S. has been operating without annual budget for more than three years and increasingly House Republicans are willing to tinker with the U.S. creditworthiness and not fund the government operation on the ideological grounds.

Investors on Wall Street have been calm to the political drama in Washington and are hoping that the U.S. will avert the debt default and pass a short term budget as early as next week.

U.S. government receives $250 billion every month and about 10% of that is required to pay for interest payment alone on government bonds. However, the government’s spending

S&P 500 index increased 0.6% or 9.45 to 1,702.01 and the Nasdaq Composite Index soared 29.36 to 3,790.11.

In Europe, markets gained for the second day in a row on the hopes that the U.S. will avert the impending debt default before October 17.

In London trading, FTSE 100 index increased 0.8% or 53.25 to 6,484 and in Frankfurt the DAX index rose 0.3% or 22.53 to 8,708.

In Paris, CAC 40 index inched up 0.01% or 0.33 to 4,218.

U.S. Stocks in Review

Del Monte Foods said it agreed to sell its canned fruits and vegetables business to Del Monte Pacific for $1.68 billion.

Infosys Limited ((INFY)) surged 6.7% or $3.39 to $53.67 after the information technology provider reported revenues in the second-quarter ending in September climbed 15% to $2.07 billion.

Net profit in the quarter declined 11% to $383 million or 67 cents a diluted share compared to $431 million or 75 cents.

JPMorgan Chase & Co ((JPM)) rose 3 cents to $52.55 after the financial service provider said revenues in the third-quarter ending in September dropped 8% to $23.9 billion.

Net in the quarter swung to a loss $380 million or 17 cents a diluted share compared to a net profit of $5.7 billion or $1.40.

Consumer and community banking saw revenue drop 13% and profit climb 15%, driven by the lower mortgage volume.

Net income from JPMorgan''s corporate and investment bank division soared 12% to $2.24 billion from $1.99 billion a year earlier.

During the quarter, the bank agreed to pay $920 million in fines that it failed to monitor traders that caused a loss of $6 billion last year in the U.K. knows as ""London whale"" case.

Wells Fargo & Company ((WFC)) fell 29 cents to $41.15 after the financial service provider reported revenue in the third-quarter dropped 3.3% to $20.5 billion from $21.2 billion a year ago.

Net income in the quarter surged 13% to $5.58 billion or 99 cents compared to $4.94 billion or 88 cents.

Total average loans for the quarter jumped $28 billion to $804.8 billion and total average core deposits climbed $44.9 billion to $940.3 billion from a year ago period.

Tier 1 common equity under Basel I rose $14.5 billion to $120.3 billion from third quarter of 2012.