Stocks rallied on Thursday as lawmakers reached a deal to increase the debt ceiling in the short-term, according to Senate Majority Leader Chuck Schumer.
The Dow Jones Industrial Average rose 337.95 points, or roughly 1%, to 34,754.94 helped by gains in Visa, Nike and Home Depot. The S&P 500 rallied 0.8% to 4,399.76, and the technology-focused Nasdaq Composite jumped nearly 1.1% to 14,654.02. Thursday's gains put the major averages in the green for the week.
Stocks hit their highs of the session as Schumer announced on the Senate floor news of the debt ceiling compromise, which will avoid an unprecedented default for now.
Washington's race to reach an agreement on the debt ceiling has been an overhang for the market this week as investors hoped to avoid a government default. Schumer said lawmakers reached a deal on a short-term debt ceiling increase, which he hopes will be passed later on Thursday. The deal will extend the debt ceiling through early December.
The small-cap benchmark Russell 2000 gained 1.5% on Thursday.
Also helping sentiment on Thursday, weekly jobless claims fell sharply last week as the enhanced unemployment benefits ended, the Labor Department reported Thursday. Initial filings for unemployment benefits totaled 326,000 for the week ended Oct. 2, below the 345,000 Dow Jones estimate and a drop from the previous week's 364,000.
Optimism about the debt deal started midday on Wednesday, spurring stocks to reverse their downward course. The Dow reversed a 459-point drop and ended more than 100 points higher. The S&P advanced 0.4%, after falling as much as 1.27%. The Nasdaq Composite rose 0.5%, after dropping as much as 1.2%.
October has been an especially volatile month, driven by uncertainty about U.S. fiscal and monetary policy and supply chain constraints. Markets may also be treading lightly heading into the third-quarter earnings season, which begins next week.
Investors are awaiting Friday's closely watched jobs report. The data is monitored by the Federal Reserve, as it mulls when to pull back its emergency pandemic stimulus measures, though the central bank has said it will look to wind down its bond-buying program soon.