Trader Michael Zicchinolfi on the floor of the New York Stock Exchange on… (Richard Drew / Associated…)
NEW YORK -- Stocks surged more than 1% in early trading Wednesday on hopes for a last-minute deal to end Washington's fiscal impasse.
The Dow Jones industrial average rose 200 points on a report that U.S. House Speaker John Boehner would allow a vote on a Senate agreement to be announced later in the day.
The Dow was up 201.38 points, or 1.3%, to 15,369.39 more than 90 minutes after the opening bell. The broader Standard & Poor's 500 was up 1.4%, while the Nasdaq composite index gained 1.2%.
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“It’s wishful thinking that a deal gets done," said Jack Ablin, chief investment officer for BMO Private Bank.
A lot could change between now and the closing bell, however, and if the deal collapses, Ablin said: "We could see this rally erased."
Stocks tumbled Tuesday as negotiations stalled on Capitol Hill. The deadline to raise the U.S. debt ceiling comes Thursday. Failure to increase the nation's borrowing capacity could result in the U.S. defaulting on its bonds or deep spending cuts that could hurt the economy.
Wall Street largely shrugged off the threat Tuesday of a credit downgrade by Fitch Ratings. Many investors still believe that Congress and President Obama will strike a deal, averting the worst, just as they have resolved other fiscal crises.
“We’ve seen this movie before,” Ablin said, likening it to a horror movie rerun. "It’s scary the first time but not as scary the second time.”
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