Created on Friday, 11 October 2013 Written by JOSHUA FREED, AP Business Writer
The closer Washington gets to a deal over the debt ceiling, the higher stocks go.
Stock prices rose on Friday as investors bet against a U.S. debt default. It was the second day of gains after the Dow Jones industrial average posted its biggest point rise of the year on Thursday.
In afternoon trading, the Dow was up 107 points, or 0.7 percent, to 15,231. The Standard & Poor's 500 index was up 10 points, or 0.6 percent, to 1,702. The Nasdaq rose 30 points, or 0.8 percent, to 3,791.
Call it the Sigh of Relief Rally.
A partial government shutdown pushed the Dow below 15,000 this week before President Barack Obama and House Republicans met on Thursday to talk about the outlines for a possible deal. Obama and Republican senators were expected to meet on Friday, too.
Stocks set new highs in mid-September but declined steadily since then as the federal government got closer to the partial shutdown that began Oct. 1. That shutdown entered its 11th day on Friday.
Even more troubling for investors is the expectation that the government will reach its borrowing limit on Oct. 17, which raises the possibility of a default on government borrowing. U.S. government bonds are usually considered the world's safest investment, so even the possibility of a default has rattled investors.
"It's nice when the world does not revolve around politicians making decisions for Wall Street," said Ralph Fogel, investment strategist and partner at Fogel Neale Partners in New York.
All 10 industry groups in the S&P 500 index rose, led by technology and energy companies.
JPMorgan Chase rose 36 cents, or 0.7 percent, to $52.88 after adjusted earnings beat expectations, despite absorbing a $9.2 billion reserve for litigation expenses.
Wells Fargo fell 4 cents to $41.40 after reporting lower third-quarter revenue as mortgage activity slowed.
Oil prices fell $1.58 to $101.42 following a report that showed growing supplies of oil outside of OPEC.
The yield on the 10-year Treasury note was flat at 2.68 percent.
Among other stocks making notable moves:
— Gap sank $2.89, or 7.3 percent, to $36.61 after it reported a 3 percent drop in sales for September. Analysts had expected a gain of 1.6 percent. Gap was the biggest decliner in the S&P 500.
— Safeway rose $1.95, or 6 percent, to $33.52, the biggest gain in the S&P 500 index. The grocery store operator said late Thursday that it plans to sell its Chicago-area Dominick's stores, allowing it to concentrate on its more profitable business.
— Micron Technology fell $1.28 cents, or 7 percent, to $17.15 after the flash memory maker's quarterly profit left some investors wanting more.