Dow Closes Up More Than 300 On Talks Of Budget Thaw

4:22 PM, Oct 10, 2013   |    comments
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Kim Hjelmgaard, USA TODAY

Stocks skyrocketed Thursday as investors were encouraged by talk of a deal that may avert a U.S. government default.

The Dow Jones industrial average jumped 323 points, or 2.2%, to 15,126 . The Standard & Poor's 500 index gained 37 points, or 2.2%, to 1,693 and the Nasdaq composite index skyrocketed 83, or 2.3%, to 3,761.

House Republican leaders said they would advance legislation to temporarily extend the government's borrowing authority so it can continue to pay its bills on time.

President Obama will meet with top House Republicans at the White House Thursday afternoon to seek a path beyond a confrontation that has left the government shuttered for close to two weeks.

All major U.S. averages have taken a beating this month as a partial shutdown of the U.S. government dragged on and the risk of a possible default on its debt increased.

"I think investors are facing what has become an all too familiar but nevertheless difficult task of correctly pricing in the risk of the U.S. reaching its debt ceiling," said Ric Spooner, chief of CMC Markets in Sydney.

Earlier on Thursday, Treasury Secretary Jacob Lew urged Congress to raise the government's borrowing limit before the current cap is reached on Oct. 17, warning that a Republican idea to prioritize payments with cash on hand could cause "irrevocable damage" to the U.S. economy.

On Wednesday, Fidelity Investments, the nation's largest money market fund manager, said it had sold all of its short-term U.S. government debt in an effort to limit money market investors' exposure to a potential default.

FIDELITY: Sheds government bonds

There were hopeful signs in the market for short-term U.S. government debt. The yield on the one-month Treasury bill eased to 0.25% from 0.27% late Wednesday.

The yield had spiked from near zero at the beginning of the month to as high as 0.3% Tuesday as investors dumped the bills out of concern that the government might not be able to pay them back when they're due. Investors demand higher yields when they perceive debt as being risky.

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