U.S. stocks rose on Thursday after a temporary truce in the debt-ceiling standoff in Congress relieved concerns of a possible government debt default, while a dip in oil prices eased worries of higher inflation.
Top U.S. Senate Republican Mitch McConnell on Wednesday floated a plan to support an extension of the federal debt ceiling into December, potentially heading off a historic default. Congressional Democrats and Republicans were expected to continue negotiating on Thursday.
“I didn’t think there is actually going to be a default, it is a low probability, high severity possibility. And since that’s been removed from the market, I’m not surprised to see this bounce in futures,” said Greg Swenson, founding partner of Brigg Macadam.
Mega-cap stocks were back in action – Apple Inc , Amazon.com Inc, Microsoft Corp and Alphabet Inc rose between 1.0% and 1.5% amid a dip in the benchmark U.S. 10-year Treasury yield on Thursday.
All of the 11 major S&P 500 sectors rose in the first half hour of trading, with financials, technology, materials, industrials, healthcare and consumer discretionary) gaining more than 1%.
Wall Street’s main indexes are now set for weekly gains, recovering from bouts of selling pressure in high-growth stocks earlier in the week when Treasury yields soared.
“I’m not worried about the markets in the near term and buying dips is advisable,” Swenson said.