Stocks rise after McConnell blinks on debt ceiling

in news •  3 years ago 

US stocks finished in the green on Wednesday after Senate Minority Leader Mitch McConnell floated options to prevent America defaulting on its debts.

Wall Street had been in the red all day until McConnell’s statement, but investors were cheered by the idea of finally concluding the debt ceiling debate.

The Dow finished up 0.3%, or 103 points.
The S&P 500 closed up 0.4%.
The Nasdaq Composite ended 0.5% higher.

Senate Minority Leader Mitch McConnell blinked first as the debt ceiling train rapidly approaches the terminal. He floated two potential options to avert a default Wednesday: Reconciliation, a kind of cheat code that avoids Republican votes (Democrats oppose reconciliation) or an emergency debt limit extension to cover current spending levels into December.

That second idea could give Congress some cover, at least for the next few months. It remains to be seen how Democrats will respond to the proposal floated by McConnell.

After McConnell's announcement, stocks turned higher, bouncing out of the red -- although not by much.

The Dow was up 20 points, or 0.1%

The S&P 500 rose 0.2%

The Nasdaq was 0.3% higher.
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Arrows are pointing down and Wall Street is in the red today. It's been a volatile few weeks. So should investors worry that this may be the end of the stock market's sugar rush?

Not yet, according to Joe Duran, head of Goldman Sachs (GS) Personal Financial Management.

There's only a 20% likelihood of a bear market while the economy is expanding -- which it is. So it's more likely this is a correction, which is defined as a 10% decline from the peak.

"I think you just have to take into context we have done a long period without a big decline," Duran told Alison Kosik on the CNN Business digital live show Markets Now.
In that context, then, the current market wobbles aren't all that worrying. And there's no panic in the market either...yet.

"There are lot of reasons to be nervous, but don't confuse a short correction with a bear market," Duran said. For example, investors are fretting about inflation and the debt ceiling debate in Congress. But even against that backdrop, company earnings are still going strong, he added.

"The first part of the recovery was really around technology stocks, growth stocks," he said. Now the market has turned towards cyclical stocks, which also include energy stocks, which are grappling with commodity price volatility.

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