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Stocks Blast Higher as Debt Ceiling Solution Nears

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Today's financial recap and tomorrow's financial outlook.

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US equity futures were up 1% overnight on news reports that congressional leaders had come to an agreement to raise the debt ceiling and avert a default. A plan evolved throughout the day, indicating that Democrats and Republicans had found a middle ground. News reports that surfaced in the late afternoon suggested that the House had enough votes to pass a debt limit bill. In turn, the bill's passage would lead to a budget agreement that will re-open the government. The S&P 500 (INDEXSP:.INX) closed up 2.1%, the largest single-day gain of the year.
Financial, industrials, and consumer-related stocks were the best performers of the day. Telecom stocks lagged the averages after leading yesterday. Interest rates on short-term Treasury bills began to return to normal as it appeared headway was being made to prevent a US default. Rates still remain elevated versus their normal levels.
The Brazilian Central Bank became the first central bank in the world to raise its main interest rate five consecutive times. The rate was hiked 0.50% to 9.50%. The continued hikes have been put in place to combat capital outflows from the country and its currency's severe depreciation versus the dollar.

Additionally, the ECB and the People's Bank of China agreed upon a currency swap of up to 45 billion euros or 275 billion yuan. Recent increases in off-shore yuan trading and increased trade between the two countries necessitated the swap line's creation.
Gartner and IDC said yesterday that PC sales fell by 8.6% in the third quarter. Slow back-to-school sales were cited as the culprit for the weakness.

Tomorrow's Financial Outlook

Economic data releases -- including September retail sales and producer prices -- are on hold until the government reopens. The preliminary estimate of the University of Michigan's October consumer confidence index is scheduled to be reported in the late morning. Economists estimate that confidence will fall to 76.0 from 77.5 in September.
Little economic data is due out from the rest of the world. Germany will release the final estimate of its September consumer price index. Canada will release its September employment figures.
JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) will be the first financial companies to report earnings. Both are scheduled to report before tomorrow's market open.

Twitter: @Minyanville

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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