Relief rally in US stocks as default threat put off

Traders work on the floor of the New York Stock Exchange on Oct 6, 2021. PHOTO: REUTERS

NEW YORK (AFP) - Wall Street stocks rallied on Thursday (Oct 7) in a buoyant session propelled by relief at a congressional agreement that removed the near-term risk of a US debt default.

Democratic and Republican Senate leaders reached an agreement to temporarily lift the debt ceiling through Dec 3 in a move that buys time for more negotiations in a divided Washington.

"We've kicked the can down the road," said Kim Forrest at Bokeh Capital Partners.

"And I think the more we kick the can down the road, the less likely the really aggressive kind of measures on taxes, and spending are. Wall Street doesn't like taxes."

The Dow Jones Industrial Average ended at 34,754.94, up 1 per cent.

The broad-based S&P 500 advanced 0.8 per cent to 4,399.75, while the tech-rich Nasdaq Composite Index gained 1.1 per cent to 14,654.02.

Worries about a default have added to concerns about inflation and tightening monetary policy, prompting volatility in recent weeks.

The Labour Department reported 326,000 new unemployment claims, seasonally adjusted, were filed last week, 38,000 less than the previous week's upwardly revised level and fewer than analysts had expected.

The data come ahead of Friday's much-anticipated September jobs report that will be scrutinised for its implications on a Federal Reserve plan to soon taper stimulus.

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Analysts expect the report to show the United States added 450,000 jobs last month and the unemployment rate dipped slightly to 5.1 per cent.

Many analysts think the Fed will announce it will start tapering stimulus in the fourth quarter unless the jobs report is a major disappointment.

Among individual companies, Levi Strauss jumped 8.5 per cent as it raised its forecast and announced a US$200 million (S$270 million) share repurchase programme.

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