(Reuters) – U.S. stocks rallied strongly at the open on Thursday, with each of the major indexes climbing more than 1 percent, as investors were encouraged by signs of progress in fiscal negotiations in Washington.
According to a Republican leadership aide, U.S. House Republicans are considering agreeing to a short-term increase in the government’s borrowing authority, keeping a possible default after October 17 at bay and buying time for negotiations on broader policy measures.
President Barack Obama and congressional leaders are set to meet Thursday for further discussions.
“It would be a minor sign of hope there may be some more positive news coming in the next couple of days, hard to make much more out of that,” said Fred Dickson, chief market strategist, D.A. Davidson & Co. Lake Oswego, Oregon.
“The markets right now are betting somebody will blink between now and October 17.”
The U.S. government shutdown has been in effect for ten days since congressional Republicans refused to pass a budget for the fiscal year without modifications to Obama’s healthcare reform law.
U.S. Treasury Secretary Jack Lew said the gridlock in Washington was hurting the U.S. economy, and urged Congress to raise a cap on government borrowing to keep America from defaulting on its debt.
Initial claims for state unemployment benefits increased 66,000 to a seasonally adjusted 374,000, the highest since the end of March and well above expectations for 310,000 claims, though technical problems in California from computer upgrades were responsible for half the increase in claims.
The Dow Jones industrial average .DJI rose 179.56 points, or 1.21 percent, to 14,982.54, the S&P 500 .SPX gained 20.74 points, or 1.25 percent, to 1,677.14 and the Nasdaq Composite .IXIC added 55.29 points, or 1.5 percent, to 3,733.066.
