Stocks surged on Wednesday as investors remained hopeful that debt-ceiling talks between President Joe Biden and congressional leaders will produce a breakthrough.
The S&P 500 (^GSPC) advanced 1.19%, while the Dow Jones Industrial Average (^DJI) gained 1.24%, or more than 400 points. The technology-heavy Nasdaq Composite (^IXIC) increased 1.28%.
Wall Street has been kept on its toes as the White House and congressional leaders try to thrash out a deal to avoid a looming US debt default. A smaller group of negotiators is taking over as President Joe Biden travels to Asia, but he has announced plans to cut short his trip this week.
Treasury Secretary Janet Yellen and others have warned of catastrophic impacts on the US economy in the case of a default, seen as potentially coming as early as June.
On Wednesday, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said the US government “probably”will not default on its debt obligations. Dimon joined other top executives of major banks in a meeting with Senate Majority Leader Chuck Schumer to discuss the debt-ceiling standoff.
The yield on the 30-year Treasury bond was little changed. The yield on the 10-year note rose to 3.57%, while the two-year note yield traded up to 4.15%. The dollar index strengthened, while gold prices weakened sinking below $2,000.
“While [House Speaker Kevin] McCarthy said a deal is possible by end of this week, the timeline may be by the end of next week ahead of Memorial Day,” JPMorgan’s US market intelligence team wrote in a note Wednesday.
President Biden plans to stay in touch with McCarthy over the coming days. Any breakthrough in the talks could potentially impact markets, the team said.
“With that in mind, equities may trade in a tight range until an outcome is observed with the biggest downside risk coming if we enter Memorial Day weekend without a solution, given the early June X-date,” the JPMorgan team added.
House Speaker Kevin McCarthy of Calif., and Senate Minority Leader Mitch McConnell of Ky., talk to reporters after meeting with President Joe Biden, Vice President…