US stocks rally as Biden, McCarthy offer reassurances on talks

·3-min read
U.S. President Joe Biden, shown here walking across the South Lawn, plans to cut short a trip to Asia to resume negotiations on lifting the debt ceiling
U.S. President Joe Biden, shown here walking across the South Lawn, plans to cut short a trip to Asia to resume negotiations on lifting the debt ceiling

Wall Street stocks finished solidly higher Wednesday, shrugging off a mixed session in overseas markets on hopes for an agreement to avert a US debt default.

Although there is still no compromise to lift the nation's debt ceiling, President Joe Biden said he was "confident" the country would not default, while Republican House Speaker Kevin McCarthy said he was "optimistic about our ability to work together."

Markets continue to watch the talks.

"We've seen that many times before, it always gets resolved," said LBBW's Karl Haeling. "But the unknown factor is the politics of the hard-core Republican representatives."

Biden was scheduled to attend a G7 summit in Japan, but has scrapped subsequent stops planned in Papua New Guinea and Australia, and will instead return to Washington on Sunday as time to reach a deal runs low.

Sam Stovall of CFRA Research pointed to an underlying caution until the standoff in the capital is resolved.

"Though there seems to be some movement in the debt default discussion, the downside risk is greater than the upside potential since a debt ceiling agreement would only result in the lessening of headwinds, as the Fed would still remain in focus," Stovall said.

The improved sentiment about the debt ceiling talks also boosted the dollar and contributed to gains in oil prices.

Traders were also looking at company news.

Big-box retailer Target reported a dip in quarterly earnings, but said it had made progress in cutting excess inventory that has weighed on earnings in a slowing consumer economy.

Analysts said the market was cheered by an update from Western Alliance Bancorporation, which said it had added $2 billion in deposits so far in the second quarter.

Worries about deposit flight have slammed regional bank shares since early March. Western Alliance jumped 10.2 percent, while Zions Bancorporation and Comerica International both won more than 12 percent.

- Japan growth boosts Nikkei -

Asia indices enjoyed mixed fortunes but star performer Tokyo jumped after figures showed Japan's economy grew more than expected in January-March thanks to a surge in tourism after pandemic border restrictions were lifted.

The figures helped push the Nikkei 225 to a 20-month high and it has now piled on more than 15 percent since the turn of the year.

Analysts said the strong market performance has been helped by corporate reforms and Bank of Japan's ultra-loose monetary policies.

- Key figures around 2030 GMT -

New York - Dow: UP 1.2 percent at 33,420.77 (close)

New York - S&P 500: UP 1.2 percent at 4,158.77 (close)

New York - Nasdaq: UP 1.3 percent at 12,500.57 (close)

London - FTSE 100: DOWN 0.4 percent at 7,723.23 (close)

Frankfurt - DAX: UP 0.3 percent at 15,951.30 (close)

Paris - CAC 40: DOWN less than 0.1 percent at 7,399.44 (close)

EURO STOXX 50: UP 0.2 percent at 4,323.23 (close)

Tokyo - Nikkei 225: UP 0.8 percent at 30,093.59 (close)

Hong Kong - Hang Seng Index: DOWN 2.1 percent at 19,560.57 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,284.23 (close)

Euro/dollar: DOWN at $1.0841 from $1.0862 on Tuesday

Pound/dollar: FLAT at $1.2488

Dollar/yen: UP at 137.63 yen from 136.39 yen

Euro/pound: DOWN at 86.79 pence from 87.00 pence

Brent North Sea crude: UP 2.7 percent at $76.96 per barrel

West Texas Intermediate: UP 2.8 percent at $72.83 per barrel