U.S. Stocks Post Strong Gains On Agreement To Raise Debt Limit

(RTTNews) - Stocks moved notably higher during trading on Thursday, extending the upward move seen over the course of the previous session. The major averages closed higher for the third consecutive session following the steep drop seen on Monday.

The major averages pulled back off their best levels in afternoon trading but remained firmly positive. The Dow jumped 337.95 points or 1 percent to 34,754.94, the Nasdaq surged up 152.10 points or 1.1 percent to 14,654.02 and the S&P 500 advanced 36.21 points or 0.8 percent to 4,399.76.

The rally on Wall Street came as lawmakers reached an agreement to temporarily extend the debt limit, avoiding a potential default.

Senate Majority Leader Chuck Schumer, D-N.Y., announced an agreement to extend the debt ceiling through early December.

The agreement would reportedly increase the debt limit by $480 billion, allowing the Treasury to continuing paying its bills through December 3rd.

While the temporary extension means the U.S. could face another debt crisis in just a few weeks, the news was still greeted positively by traders.

Adding to the positive sentiment, a report from the Labor Department showed a bigger than expected pullback in first-time claims for U.S. unemployment benefits in the week ended October 2nd.

The report said initial jobless claims fell to 326,000, a decrease of 38,000 from the previous week's revised level of 364,000.

Economists had expected jobless claims to dip to 348,000 from the 362,000 originally reported for the previous week.

The bigger than expected decrease came after jobless claims rose for three straight weeks, reaching their highest level since early August.

The release of the weekly jobless claims report came a day ahead of the release of the Labor Department's more closely watched monthly jobs report on Friday.

Economists currently expect employment to increase by 488,000 jobs in September after rising by 235,000 jobs in August. The unemployment rate is expected to dip to 5.1 percent from 5.2 percent.

Sector News

Oil service stocks moved sharply higher over the course of the session, driving the Philadelphia Oil Service Index up by 3.3 percent.

The strength among oil service stocks came amid a notable increase by the price of crude oil, with crude for November delivery climbing $0.87 to $78.30 a barrel.

Significant strength was also visible among networking stocks, as reflected by the 2.3 percent jump by the NYSE Arca Networking Index.

Steel stocks also turned in a strong performance on the day, resulting in a 1.9 percent advance by the NYSE Arca Steel Index. The index rebounded after ending the previous session at a six-month closing low.

Brokerage, housing and computer hardware stocks also moved notably higher on the day, while airline stocks were among the few groups to buck the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index advanced by 0.5 percent, while Hong Kong's Hang Seng Index spiked by 3.1 percent.

The major European markets also showed strong moves to the upside. While the U.K.'s FTSE 100 Index jumped by 1.2 percent, the French CAC 40 Index and the German DAX Index surged up by 1.7 percent and 1.9 percent, respectively.

In the bond market, treasuries moved notably lower following news of the debt limit agreement. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.7 basis points to a four-month closing high of 1.571 percent.

Looking Ahead

The monthly jobs report is likely to be in the spotlight on Friday, as the data could have a significant impact on the Federal Reserve's plans to begin scaling back its asset purchases.