4:00 PM New York – U.S. market indexes soared as hopeful investors pinned hopes on a speedy resolution to the government stalemate. Republican leaders and President Obama met this afternoon to discuss a proposal to increase short term debt limit but keep the government closed.
Stocks on Wall Street opened higher on the hopes that a meeting between House Republican leaders and President Obama will start the stalled budget and debt ceiling talks.
“What we want to do is offer the president today the ability to move. We are offering a temporary increase in the debt ceiling, an agreement to go to conference on the budget, for his willingness to sit down and talk with us a way forward to open the government,” Speaker John Boehner said.
The Republican proposal would still keep the government closed and keep the pressure on Democrats to compromise.
The White House Press Secretary Jay Carney declined to say if president will agree to sign on a deal proposed by Republicans that does not include reopening of the government.
Investors bid up stocks and market indexes surged and wiped out the losses accumulated in the last five days of trading.
However, investors’ enthusiasm may be misplaced because the offer will only provide debt ceiling increase till November 22.
Separately, Treasury Secretary Jacob Lew urged Congress to increase the government’s borrowing limit before the current limit expires on October 22.
On Wednesday, Fidelity Investments, the manager of largest money market fund, said it traded out of all of its short-term U.S. government debt to limit fund’s exposure to a potential debt default.
The yield on one-month Treasury bill dropped to 0.17% from as high as 0.27% on late Wednesday.
S&P 500 index gained 33.26 or 2.01% to 1,689.26 and the Nasdaq Composite Index soared 2.2% or 80.83 to 3,758.21.
Markets in Europe surged in the final hour following a rise in the U.S. indexes.
In London, FTSE 100 index gained 1.5%, in Paris CAC 40 index soared 2.2% and in DAX 30 index advanced 2%.
Gold declined $10.30 an ounce to $1,297 and solver dropped 40 cents to $21.88 and copper eased 1%.
Immediate month delivery of crude oil futures increased $1.28 to $102.89 a barrel.
Weekly Jobless Claims Increase
Weekly jobless claims in the last week increased 66,000 to a seasonally adjusted 374,000, the highest since the end of March, the Labor Department said today.
Almost half of the increase in weekly claims were linked to a system problems due to upgrading of computers in California. In addition, 15,000 claims were linked from non-federal workers linked to government shutdown.
Separating these claims, initial jobless claims would have increased 15,000.