US stocks surge on Washington budget progress

Specialist Jay Woods is reflected in a screen at his post on the floor of the New York Stock Exchange Thursday, Oct. 10, 2013. Wall Street roared in approval Thursday after Washington appeared to break an

NEW YORK CITY—US stocks surged Thursday on progress toward a potential deal in Washington to prevent a debt default, recovering a hefty portion of their losses since the partial government shutdown began.

The Dow Jones Industrial Average soared 323.09 (2.18 percent) to 15,126.07, just below its level on the eve of the October 1 shutdown.

The broad-based S&P 500 jumped 36.16 (2.18 percent) to 1,692.56, while the tech-rich Nasdaq Composite Index added 82.97 (2.26 percent) at 3,760.75.

A breakthrough in the political logjam seemed at hand when House of Representatives Speaker John Boehner offered to extend the US borrowing authority for six weeks. But his proposal would not end the shutdown.

President Barack Obama met with Republican leaders at the White House.

The developments suggest “both sides appreciate the gravity of a default,” said Jack Ablin, chief investment officer at BMO Private Bank.

“It’s not worth sending our country into a tailspin over ideological differences. I think investors are breathing a sigh of relief.”

Some of the biggest gains came in technology stocks that had retreated in recent days.

Facebook rose 4.9 percent, Netflix jumped 5.4 percent, Amazon increased 2.3 percent and Dow component Microsoft advanced 2.1 percent.

Banking stocks, which have suffered amid concerns the Washington impasse could harm the economy, also scored outsized gains.

Dow component JPMorgan Chase surged 3.5 percent, Wells Fargo jumped 2.7 percent and Citigroup tacked on 2.8 percent.

JPMorgan and Wells Fargo will report earnings Friday in some of the quarter’s earliest major results.

Oil giant Chevron, another Dow component, underperformed the index, rising just 0.2 percent after disclosing that quarterly earnings would be lower than the previous quarter, in part due to “significantly” lower downstream earnings.

Morgan Stanley slashed its earnings estimate to $2.60 per share from $2.95.

Citrix, which provides cloud computing services, stood out in falling 11.9 percent after warning that both earnings and revenues lagged expectations.

The company forecast revenues of $710-$712 million, below the previous projection of $730-$740 million.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.68 percent from 2.65 percent Wednesday, while the 30-year increased to 3.74 percent from 3.72 percent.

Prices and yields move inversely.