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The US stock registered a relief rally on Thursday as lawmakers agreed to raise the debt ceiling by an additional $480 billion. Tech stocks gained after staying under pressure for a while.
On Thursday, October 7, the Dow Jones Industrial Average (INDEXDJX: .DJI) gained 337 points amid a healthy market recovery. The index ended trading 1% up at 34,754.94 levels. The US stock indices rallied as the lawmakers reached a deal to increase the debt ceiling in the short-term period.
Indices amid Short-Term Debt Solution News
Along with the Dow Jones, the S&P 500 (INDEXSP: .INX) also surged by 0.83% giving a closing at 4,399.76 levels. On the other hand, the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) gaining 1.1% and giving a closing at 14,654 levels. Thursday’s market gains helped the weekly average to turn positive.
Senate Majority Leader Chuck Schumer on Thursday announced the news of the debt ceiling compromise. This will avoid any default by the US government in the short term. Lawmakers in the US have been having major discussions over raising the debt ceiling.
The Republicans had been objecting to this proposal for a while keeping Wall street investors on tenterhooks. Schumer said that lawmakers have agreed for a short-term debt ceiling increase and shall be passed later today. He further added:
“I have some good news. We have reached agreement to extend the debt ceiling through early December, and it’s our hope that we can get this done as soon as today.”
As per people familiar with the matter, the agreement allows a debt ceiling to rise to $480 billion. As per the Treasury Department, this sum will allow them to pay its bills by December 3. The current national debt for America stands at $28.4 trillion. This deal will allow the debt to rise to about $24.8 trillion.
Tech and Stocks Linked to Economic Reopening Rally
The tech sector which has been under pressure for a while had a sigh of relief on Thursday. Twitter Inc (NYSE: TWTR) stock gained 4.4% closing at $63.97. AMD (NASDAQ: AMD) stock also gained 2.71% closing at $106.25. At the same time, Nvidia Corp (NASDAQ: NVDA) stock gained 1.81% closing at 210 levels.
The stocks linked to the economic reopening also rallied on Thursday, October 7. General Motors Company (NYSE: GM) gained 4.7% yesterday. Also, Costco reported better-than-expected September sales with its shares adding 0.8%. The small-cap benchmark Russell also gained 1.5% on Thursday.
Another major positive trigger to the market was the drop in the weekly jobless claims. The Labor Department said that this happened as the enhanced unemployment benefits ended. For the week ending October 2, the initial filings for unemployment benefits totaled 326,000. This was below the previous week’s numbers of 364,000 and the Dow Jones estimate of 345,000.
October could be specifically a volatile month. This could be the result of the uncertainty in the monetary and fiscal policy and other supply chain contstraints.