House Speaker John A. Boehner can be seen on a television screen on the floor… (Richard Drew / Associated…)
NEW YORK -- Stocks rallied 2% as congressional Republicans and President Obama appeared to be moving closer to a deal that would avert a potentially catastrophic default by the U.S. on its debt.
The Dow Jones industrial average jumped 323.09 points, or 2.2%, to 15,126.07, its biggest one-day gain of the year. The blue-chip index rose 308 points on Jan. 2 after Washington resolved its last major crisis over the so-called fiscal cliff.
The broader Standard & Poor's 500 rose 36.12 points, or 2.2%, to 1,692.52. The technology-focused Nasdaq composite index gained 82.97 points, or 2.3%, to 3,760.75.
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“There was really a big sigh of relief,” Jerry Braakman, chief investment officer for First American Trust in Santa Ana. “The market has been driven by fear.”
Stocks had shed about 4% of their value over the last few weeks as Congress and Obama became locked in a seemingly intractable stalemate over spending, Obamacare and the nation's debt limit.
While investors became increasingly anxious as the fiscal crisis dragged on, few on Wall Street have really believed congressional Republicans would allow the country to default.
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“They’ve gone down this route a few times now, and every time they’ve had to compromise and let go,” Braakman said. “In the long run it seems like they’re losing the battle on this, and that’s why Wall Street mostly saw this kind of a as a non-event.”
The bond market also showed signs of easing anxieties. The yield on the one-month Treasury bond, which had risen sharply to levels not seen since the 2008 financial crisis, fell to about 0.24%, down from about 0.34% on Tuesday.
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