US: Wall Street ends higher on optimism about US debt-ceiling deal

[SAN FRANCISCO] Wall Street ended higher on Wednesday as investors grew more optimistic that congressional Democrats and Republicans could reach a deal to avert a government debt default.

Top US Senate Republican Mitch McConnell said his party would support an extension of the federal debt ceiling into December. This would head off a historic default that would exact a heavy economic toll.

"McConnell made some dovish comments about temporarily extending the debt ceiling," said Jay Hatfield, founder and portfolio manager at Infrastructure Capital Advisors. "That's going to be interpreted in the short-run as positive."

McConnell's offer could provide an off-ramp to a months-long standoff between President Joe Biden's Democrats and McConnell's Republicans, who had been expected on Wednesday to block a third attempt by Senate Democrats to raise the US$28.4 trillion debt ceiling.

Stocks were lower for much of the session after a strong showing of private jobs in September fuelled bets the Federal Reserve could start reining in monetary stimulus soon.

The Dow Jones Industrial Average rose 0.3 per cent to end at 34,416.99 points, while the S&P 500 gained 0.41 per cent to 4,363.55.

The Nasdaq Composite climbed 0.47 per cent to 14,501.91.

Mega-cap growth stocks Amazon and Microsoft both rose more than 1 per cent after the benchmark US 10-year Treasury yield retreated from three-month highs by early afternoon.

The ADP National Employment Report showed private payrolls increased by 568,000 jobs last month. Economists polled by Reuters had forecast a rise of 428,000 jobs.

"Positive labour market data comes with the implication that the Fed can tighten policy at a quicker pace. But the fact that hiring is up shouldn't be discounted - it's definitely a good thing in terms of recovery," said Mike Loewengart, managing director, investment strategy at E*Trade Financial.

The more comprehensive non-farm payrolls data is due on Friday. It is expected to cement the case for the Fed's slowing of asset purchases.

Oil prices hit multi-year highs early, but crude prices retreated from those highs while the S&P 500 energy sector index slid over 1 per cent, the weakest performer among 11 sector indices.

American Airlines Group fell 4.33 per cent after Goldman Sachs cut its rating on the carrier to "sell" from "neutral".

Shares in steelmaker Nucor dropped 2.75 per cent after Goldman Sachs lowered its rating to "neutral" from "buy".

Declining issues outnumbered advancing ones on the NYSE by a 1.31-to-1 ratio; on Nasdaq, a 1.58-to-1 ratio favoured decliners.

The S&P 500 posted three new 52-week highs and nine new lows; the Nasdaq Composite recorded 31 new highs and 241 new lows.

Volume on US exchanges was 10.6 billion shares, compared with the 11 billion average over the last 20 trading days.

REUTERS