U.S. stocks were not much higher early Thursday after the U.S. House of Representatives overnight approved a debt ceiling deal that would avert global financial turmoil and a certain recession.
The S&P 500 index rose about 5 points, or 0.13%, while the Dow Jones industrial average fell 115 points, or 0.35%, after 10 a.m. Investors shifted their focus to mixed retail earnings and a lackluster outlook for Salesforce.
Traders took the positive debt ceiling news in part because stocks did not fall ahead of the vote based on congressional expectations, according to Jason Ware, chief investment officer at Albion Financial Group. He added that the bill is still awaiting passage in the US Senate in the coming days.
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“The stakes were resilient throughout this episode of DC brinksmanship,” Ware says. “Investors have basically said, ‘We’ve seen this movie before,’ so there’s no reason to bail out when it comes to the other side of this risk.”
Instead, he says, investors will again fret over more familiar woes — inflation, central bank interest rate hikes and the risk of recession.
“Now back to our regularly scheduled program,” Ware says.
The S&P index has gained 9.3% so far this year to close at 4,180 on Wednesday.
In Asia, stock indexes mostly rose overnight after the debt deal, despite concerns about the Chinese economy dampening sentiment.
Japan’s benchmark Nikkei 225 rose 0.3% to 30,976.43 in morning trade. Australia’s S&P/ASX 200 rose 0.3% to 7,109.40. South Korea’s Kospi quickly gave up early gains and fell 0.4% to 2,567.86. Hong Kong’s Hang Seng rose 0.8% to 18,381.63, while the Shanghai Composite added 0.4% to 3,216.86.
Major stock indices in Europe also rose after the US debt ceiling news, with Germany’s DAX up 1% and London’s FTSE up 0.3%. A report showing lower-than-expected inflation in the euro zone also boosted stocks.
If the debt deal passes the Senate, government checks will continue to go to Social Security recipients, veterans and others, preventing a financial upheaval at home and abroad, ahead of Monday’s deadline when the U.S. Treasury runs out of money to pay its debt.
Contributed by: Associated Press
