Wall Road rallies, greenback positive aspects as debt restrict talks progress
© Reuters. A view of a giant display of stock indexes in Shanghai, China, October 24, 2022. REUTERS/Aly Song/File Photo
By Stephen Culp
NEW YORK (Reuters) – Wall Street moved higher on Wednesday, gathering momentum in afternoon trading, and the dollar touched a six-week high as regional banks surged and negotiations in Washington over raising the debt ceiling moved forward.
All three major U.S. stock indexes were up more than 1% as hopes of a deal to raise the debt limit helped investors look past a dismal second-quarter outlook from retailer Target Corp (NYSE:), coming on the heels of a similarly downbeat forecast from Home Depot Inc (NYSE:) on Tuesday.
Regional banks provided some lift, with the KBW Regional Banks index surging 6.8% amid waning concerns of a liquidity crisis in the sector.
Debt ceiling negotiations, which have become a growing preoccupation of market participants, appeared to be moving in the right direction, with vows from U.S. President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy that the United States will avoid a catastrophic default.
“What we’re seeing today is positive comments saying progress is being made toward a debt ceiling deal, and that’s given the market reason to put money back to work,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
“I think we’ll get past the beginning of June before there’s a deal. But for today, the sun is shining and the birds are chirping.”
The rose 380.36 points, or 1.15%, to 33,392.5, the gained 45.22 points, or 1.10%, to 4,155.12 and the added 142.57 points, or 1.16%, to 12,485.62.
European shares closed lower as sentiment was weighed down by downbeat earnings and concerns over the possibility of a U.S. debt default.
The pan-European index lost 0.15% and MSCI’s gauge of stocks across the globe gained 0.54%.
Emerging market stocks lost 0.23%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.49% lower, while rose 0.84%.
The dollar gained touched a six-week high against a basket of world currencies, benefiting from its safe-haven status as debt ceiling talks grind on, but pulled back as investors trimmed their bets on near-term interest rate cuts from the Federal Reserve.
“The dollar is telling you that the people who trade forex don’t believe a default is going to happen,” Pavlik said.
The rose 0.3%, with the euro down 0.23% to $1.0836.
The Japanese yen weakened 0.87% versus the greenback at 137.61 per dollar, while Sterling was last trading at $1.2486, up 0.01% on the day.
inched higher after housing data showed an increase in groundbreaking and building permits for single-family homes, but were held range-bound by U.S. credit default fears.
Benchmark 10-year notes last fell 10/32 in price to yield 3.5868%, from 3.549% late on Tuesday.
The 30-year bond last fell 6/32 in price to yield 3.8839%, from 3.873% late on Tuesday.
Oil prices rebounded on a brightened demand outlook and optimism over a debt ceiling resolution.
jumped 2.78% to settle at $72.83 per barrel, while settled at $76.96 per barrel, up 2.74% on the day.
Gold pulled back in opposition to the rising dollar after remarks from Federal Reserve officials suggested any talk of rate cuts would be premature.
dropped 0.3% to $1,982.47 an ounce.