Stocks rise as debt talks continue in Washington
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.
With an hour of trading left, the Dow was up 83 points, or 0.6 percent, to 15,209. The Standard & Poor's 500 index was up eight points, or 0.5 percent, to 1,701. The Nasdaq rose 27 points, or 0.7 percent, to 3,787.
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 met 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.
Kim Forrest, an equity research analyst at Fort Pitt Capital Group in Pittsburgh, said it's too soon to assume that the meetings in Washington will avert a default.
"That's super that they're talking to each other, but what on Earth is the agreement going to look like, and is it going to stave off default? I don't think we know that yet," Forrest said. "I think the stock market is getting ahead of itself."
All 10 industry groups in the S&P 500 index rose, led by technology and energy companies.
Gold fell, and took gold mining stocks down with it. Gold for December delivery fell $28.70, or 2.2 percent, at $1,268.20 per ounce, its lowest price since mid-July. Mining company Barrick Gold fell 66 cents, or 3.7 percent, to $17.17. Newmont Mining fell 56 cents, or 2.1 percent, to $25.74.
Oil prices fell 99 cents to $102.02 after a report showed growing supplies of oil outside of OPEC.
The yield on the 10-year Treasury note was flat at 2.68 percent.
The stock gains were enough to put the big indexes back into positive territory for the week, other than the Nasdaq, which has fallen a half-percent this week.
Among other stocks making notable moves:
— Gap sank $2.63, or 6.7 percent, to $36.85 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 $2.19, or 7 percent, to $33.76, 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 $1.70 cents, or 9 percent, to $16.73 after the flash memory maker's quarterly profit left some investors wanting more.