Markets soar on move to spending deal

Written By Unknown on Jumat, 11 Oktober 2013 | 18.38

The possibility of a deal to avert a government default sent stocks soaring yesterday, as President Obama and congressional Republicans met at the White House, capping an up-and-down day that saw Republicans floating a compromise the president appeared amenable to.

After Speaker John Boehner and other Republicans met with Obama last night, Majority Leader Eric Cantor said, "We expect further conversations tonight," while the White House called it a good meeting but said "No specific determination was made."

Boehner earlier proposed extending the government's ability to borrow money for six weeks if Obama agreed to negotiations on spending cuts. White House spokesman Jay Carney said the president "would likely sign" a short-term extension.

The Dow Jones industrial average rose 323 points on that glimmer of hope.

"The one thing that needs to happen is they need to raise the debt limit and avoid a default," said Paul Edelstein of IHS Global Insight in Lexington. "The markets will rally even further if they can reach a short-term agreement."

It wasn't all rosy, though. Senate Majority Leader Harry Reid declared the compromise was "not going to happen." Reid advanced legislation to simply raise the debt limit, which Republicans are likely to block.

The closer the nation comes to the Oct. 17 default deadline, the more roiled markets will become, said Robert A. Nakosteen, a professor of economics at the UMass-Amherst Isenberg School of Management.

"One of the remaining issues is how this country is lurching from one near crisis to the next near crisis," Nakosteen said.

Herald wire services contributed to this report.


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