US stocks didn’t get much support early Thursday after the US House of Representatives approved a debt ceiling deal the night before to head off global financial turmoil and an almost certain recession.
The S&P 500 was up about 5 points, or 0.13% while the Dow Jones Industrial Average was down 115 points, or 0.35%. Shortly after 10 a.m., investors appeared to shift their focus to mixed retail earnings and a tepid outlook from Salesforce.
Traders took the positive debt ceiling news in stride in part because stocks never fell in the run-up to the vote on expectations that Congress would eventually reach an agreement to avoid a default, says Jason Weir, chief investment officer at Albion Financial Group. As he says, the legislation is still awaiting passage by the US Senate in the coming days.
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“Stocks have been resilient throughout this episode of brinksmanship in DC,” Weir says. “Investors basically said, ‘We’ve seen this movie before,’ so there’s no reason to get complacent while we get to the other side of this risk.”
Instead, he says, investors can return to worrying about a more familiar set of problems — inflation, a Fed rate hike, and the risk of a recession.
“Now back to our regularly scheduled program,” Weir says.
The S&P closed Wednesday at 4,180, up 9.3% so far this year.
In Asia, stock indices were mostly higher overnight after the debt deal, although enthusiasm was muted on concerns about the Chinese economy.
Japan’s Nikkei 225 rose 0.3% in morning trade, to 30,976.43. Australia’s S&P/ASX 200 rose 0.3%, to 7,109.40. South Korea’s Kospi Index quickly gave up early gains, falling 0.4%, to 2567.86. Hong Kong’s Hang Seng jumped 0.8% to 18,381.63, while the Shanghai Composite climbed 0.4% to 3,216.86.
Major stock indices in Europe also rose after news of the US debt reduction, with Germany’s DAX up 1% and London’s FTSE up 0.3%. A report showing lower-than-expected inflation in the eurozone also boosted stocks.
If the debt deal also passes in the Senate, government checks will continue to flow out to Social Security recipients, veterans and others and prevent financial turmoil at home and abroad, ahead of Monday’s deadline when the Treasury Department said the US would run out of money. money to pay its debts.
Contributing: The Associated Press
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