Day Traders Diary
The major averages surged today in part to hopes that congressional leaders and President Joe Biden could come to a deal on the U.S. debt ceiling and avoid a catastrophic default. The Dow Jones Industrial Average rose 408 points or 1.24%, to 33,420.77. The S&P 500 gained 48 points or 1.19% to 4,158. The Nasdaq Composite advanced 157 points or 1.28% to 12,500.
At the conclusion of a meeting between the president and congressional leaders Tuesday, House Speaker Kevin McCarthy said that a "better process" is now in place for further talks, saying it's "possible to get a deal by the end of the week." The White House said that Biden canceled a second leg of an upcoming international trip to focus on the negotiations.
"Now we have a structure to find a way to come to a conclusion," McCarthy said on CNBC's "Squawk Box" Wednesday. "I think at the end of the day we do not have a debt default. I think we finally got the president to agree to negotiate."
On Wednesday morning, Biden said from the White House that he and the other lawmakers had a "productive" meeting.
"I'm confident that we'll get the agreement on the budget, that America will not default," Biden said.
Concerns over a potential default have weighed on markets recently. The Dow is down about 2% this month, including a 1% decline on Tuesday.
Sam Stovall, chief investment strategist at CFRA Research, said he expects that markets are stuck in neutral, even as the news becomes "more and more optimistic" on the debt ceiling. He cited recent trends in the 10-year Treasury yield, as well as strength indicators in the S&P 500.
"They're not really giving any kind of a clue as to which way they're likely to break, meaning favorably or negatively. We're still in an up channel for the S&P 500. But I think we are in search of a catalyst to either break out or break down," Stovall said.
Regional bank shares rebounded on Wednesday, helping market sentiment, as Western Alliance Bancorp recently detailed improving deposit growth. The SPDR S&P Regional Bank ETF (KRE) jumped more than 7%. Western Alliance soared 10.2%
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