In a stark reverse from recent trading sessions, Thursday saw Wall Street catapulting to huge gains, as investors apparently took heart in a prospective House Republican plan to at least temporarily save the US from defaulting on its debts.
The Standard & Poor’s 500 index and the Dow Jones Industrial Average each finished the day 2.18 percent higher, at a total of 1,692.56 points and 15,126.07 points respectively. Meanwhile, the NASDAQ posted a final tally of 3,760.75 points on an advance of 2.26 percent.
The first overt sign that House Republicans are ready to move towards some kind of deal in order to avoid the breaching of the debt ceiling on Oct 17 of next week is obviously a welcome gesture, but also a rather paltry one considering some of the details.
With hysteria over the debt-ceiling impasse moving to center stage, the plan announced today by Republicans does not address the ongoing government shutdown that is now well into its second week. Furthermore, the raising of the debt ceiling currently on offer would be for a period of six weeks, at the end of which Americans will surely be subjected to yet another round of political theatre.
Indeed, Equities.com contributor George Brooks summed up the situation rather astutely, when he likened a market rally under current political conditions to "More like a medicine ball bouncing than a golf ball off a cart path."
The only economic data point to emerge on Thursday was the Department of Labor’s weekly jobless claims report, which spiked by almost 70,000 from the prior week in a potential sign that the abrupt and senseless truncation of US government services is beginning to have palpably negative consequences for working people.
Despite such concerns, indices posted their largest single-day advances since January. On the S&P 500, basic materials stocks from the oil and gas sectors posted the best performance, with substantial gains for Marathon Petroleum (MPC) , CONSOL Energy (CNX) , Tesoro Corporations (TSO) , and Valero Energy (VLO) .
Brick-and-mortar retailer Best Buy (BBY) topped the S&P for the day, gaining 7.5 percent to close at $39 per share.
All of the Dow’s components finished the day higher, led by aerospace/defense monolith Boeing Co. (BA) , followed by Unitedhealth Group Inc. (UNH) , both of whom rode the day’s optimism to gains of nearly 4 percent.
Meanwhile, on the NASDAQ tech shares were the big story of the day. Micron Technology (MU) , Facebook (FB) , Intel (INTC) , Microsoft (MSFT) , and Zynga (ZNGA) all advanced on heavy trading. Groupon Inc (GRPN) popped over 8 percent after announcing upgrades to its point-of-sale system.