Markets ended sharply higher Thursday, as the Standard & Poor’s 500, Dow Jones Industrial Average and Nasdaq were all up nearly 1 percent.
Growth sectors outperformed value sectors, as consumer discretionary, materials and health care all outperformed.
A deal was reached in Congress Thursday to extend the debt ceiling through Dec. 3, supporting risk assets and perhaps driving a bit of a relief rally.
Jobless claims also came in slightly below expectations, underscoring an ongoing recovery in U.S. employment.
The 10-year Treasury yield continues to grind higher as well, now around 1.57 percent, up nearly 0.4 percent since August lows, as the economy continues to stabilize and the Federal Reserve gets ready to start tapering asset purchases in November.
The price of crude oil was up $1.38 to $78.81 a barrel, and the spot price of gold was down $6 to $1,755.80 an ounce.
Notably, the volatility index moved back down under 20 levels, further supporting positive market sentiment.
Republicans and Democrats announced a deal to raise the debt ceiling by roughly $480 billion, which would allow borrowing through Dec. 3 and avoid a potentially devastating default scenario in mid-October.
Sen. Mitch McConnell announced Wednesday that Republicans would allow Democrats to vote on the short-term extension.
However, Democrats continue to tackle the longer-term issue of putting forth a social infrastructure package, with recent talks focused on a total in the $1.9 trillion to $2.1 trillion range.
Headlines around these spending plans are expected in the weeks ahead with the final number perhaps at the low end of the range.
Meanwhile, Thursday’s initial jobless claims figure of 326,000 came in below expectations of 348,000, supporting the narrative around a steady U.S. employment recovery.
This comes after the ADP employment survey on Wednesday also exceeded expectations, with private payrolls growing by 568,000 versus the consensus estimate of 450,000.
Given these positive employment signals, all eyes will remain on the September nonfarm jobs report today, where expectations are for an increase of 488,000 jobs added and the unemployment rate falling slightly to 5.1 percent.
Edward Jones analysts believe that if this pace of gains in employment holds, the Fed will be ready to begin tapering asset purchases in November. Keep in mind, however, that investors seemed to have digested this tapering news, and markets historically have performed well in periods leading up to Fed tightening.