US stocks jump on prospect of 11th hour Washington deal

WASHINGTON (AFP) - US stocks jumped more than one per cent in early trade Wednesday as expectations rose for a last-minute deal between Washington politicians to avoid the country defaulting on its debt.

Thirty minutes into trade, the Dow Jones Industrial Average was up 172.68 points (1.14 per cent) at 15,340.69.

The broader S&P 500 rose 18.62 (1.10 per cent) to 1,716.68, and the Nasdaq Composite gained 37.35 (0.98 per cent) at 3,831.36.

Fresh third-quarter earnings from a number of companies had a mixed impact.

Dow component Intel lost 0.5 per cent after it cuts its forecast for the rest of the year. For the third quarter the chipmaker beat forecasts slightly.

Railway operator CSX fell 0.5 per cent despite a 1.8 per cent gain in quarterly profits. The company pointed out a significant drop in the volume of coal it hauls.

Yahoo picked up 1.9 per cent after announcing it would hold on to a larger chunk of Chinese e-commerce powerhouse Alibaba than originally planned, as Alibaba goes public.

Pepsico shares were up 1.7 per cent despite third-quarter earnings of US$1.91 billion that were barely higher than a year earlier.

Bank of America rose by 1.4 per cent as it beat forecasts for its third quarter, helped by a fall in provisions for soured loans.

Apple shares were 0.3 per cent higher despite reports that it had cut back orders for its new iPhone 5C due to slow demand in the market for the smartphone.

Bond prices fell. The 10-year Treasury yield rose to 2.74 per cent from 2.72 per cent late Tuesday, while the 30-year increased to 3.80 per cent from 3.78 per cent.