US stocks surge on debt-ceiling deal

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NEW YORK: US stocks opened strongly higher on Monday as investors welcomed an 11th-hour deal struck between President Barack Obama and top lawmakers on raising the government's debt ceiling.

The Dow Jones Industrial Average soared 93.54 points (0.77 percent) to 12,236.78 in the first 15 minutes of trading.

The broader S&P 500 rose 9.50 points (0.74 percent) to 1,301.78, while the tech-heavy Nasdaq Composite rallied 23.51 points (0.85 percent) to stand at 2,779.89.

Prices for US Treasury bonds, which are still under the threat of a ratings downgrade, were mixed. The yield on the 10-year Treasury hovered at around 2.81 percent, unchanged from late on Friday, while that on the 30-year bond rose to 4.16 percent from 4.13 percent. (Bond prices and yields move in opposite directions.)

The deal announced late Sunday would raise the US government's $14.29 debt ceiling by about $2.4 trillion in two steps, while calling for roughly the same amount in spending cuts over ten years.

It came just two days before a deadline set by the US Treasury for when the debt limit needed to be raised in order for the government to avoid a potentially disastrous default.

The agreement must still be approved by both houses of Congress, where it faces opposition from both conservative Republicans and liberal Democrats.

Last week, Wall Street took a beating, with the Dow falling 4.2 percent as investors worried the parties would fail to reach a deal and the government would default on its debts or lose its triple-A credit rating.

"The Street seems to have breathed a tremendous sigh of relief this morning," said Sarah Wasserman, an analyst with Schaeffer's Investment Research.

Financial stocks were among the big winners on Monday morning, with Bank of America climbing 2.5 percent.

Economically sensitive Caterpillar also posted strong gains. Shares of the maker of mining and construction equipment rose 2.3 percent in the first 15 minutes of trading.

Copyright AFP (Agence France-Presse), 2011