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Market Update

U.S. Senate Leaders Hope Agreement Will Turn to Law Before Ceiling Expires

Author: Nichole Harper
Last Update: 1:19 PM ET October 16 2013

1:15 PM New York U.S. stocks advanced on the hopes that the latest Senate agreement will become a law before the debt ceiling expires tomorrow. However, the short term agreement set up another round of confrontation in early January. China is looking to alternatives to U.S. government bonds.

Market indexes on Wall Street cheered the latest agreement between Senate leaders that still needs an approval from the U.S. House and the White House.

S&P 500 index gained 1.2% or 20.24 to 1,718.10 and the Nasdaq Composite Index gained 1.1% or 42.27 to 3,836.28.

The agreement between two leaders in the Senate may reopen the government as early as next week if the procedural vote does not hold it up from becoming a law.

The deal between Senate Majority Leaders Harry Reid and Minority Leaders Mitch McConnell would allow the funding for the U.S. government through Jan 15, 2014 and raise the debt limit to cover the expenses until Feb 7.

The deal could still be held up by one senator and may delay from becoming law for at least a week.

House Speaker signaled that he will bring the agreement for a vote and with the help of Democrats may pass.

However, the current agreement only sets up another round of confrontations.

In London trading, the benchmark index gained 0.3% to 6,572 and the CAC 40 index fell 0.3% to 4,244. In Frankfurt, the DAX 30 index advanced 0.5% to 8,846.

The U.S. Treasury completed the sale of $42 billion of 4- and 52-week bills and plans to finish $26 billion of 189-day cash management securities later today. The last auction conducted by the Treasury before the current limit expires.

Rates on $120 billion of bills maturing tomorrow jumped to 0.36% yesterday and dropped to 0.1% in morning trading today.

U.S. Stocks in Review

Abbott Laboratories (ABT) increased 6% after the health-care diagnostics maker reported better than expected third-quarter results. Abbott also lifted its dividend by more than half.

Total sales in the third-quarter ending in September grew 2% to $5.37 billion. Net earnings in the quarter plunged 50.3% to $966 million or 61 cents a diluted share compared to $1.94 billion or $1.21.

Mattel (MAT) gained 2.5% to $42.55 after the toymaker exceeded sales estimates.

Net sales in the third-quarter ending in September advanced 6% to $2.21 billion. Net income in the quarter soared 16% to $423 million or $1.21 a diluted share compared to $366 million or $3.65.

Stanley Black & Decker Inc (SWK) plunged 13% after the maker of power tools lowered its full-year earnings and blamed it on weak margins in its security business and uncertainty linked to the U.S. government shutdown.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc