Stocks surged, sending the Standard & Poor’s 500 Index to its biggest gain in four months, and Treasuries rallied amid optimism lawmakers were moving closer to a deal that would cut the U.S. budget deficit and avoid default. Oil helped lead gains in commodities and the dollar fell. The S&P 500 jumped 1.6 percent to 1,326.73 at 4 p.m. in New York, its biggest gain since March 3. The S&P GSCI Index of 24 commodities advanced 1 percent as oil surged 1.6 percent to $97.50 a barrel. Ten-year Treasury note yields lost six basis points to 2.87 percent and the Dollar Index, a gauge of the currency against six major peers, slipped 0.4 percent.
Stocks added to an early advance and Treasuries climbed after President Barack Obama endorsed a deficit-cutting proposal by a bipartisan group of senators known as the “Gang of Six.” Earlier gains in global equities were triggered by higher-than- estimated results at companies from International Business Machines Corp. (IBM) to Coca-Cola Co. and Novartis AG. (NOVN)
“We’re getting positive news flow on two fronts today: the political front related to the national debt ceiling and we have the reports coming out of the earnings season,” Keith Wirtz, who helps oversee $18 billion as chief investment officer for Fifth Third Asset Management in Cincinnati, said in a telephone interview. “IBM’s release is one of the tone-setters for this week. A good earnings season might put a floor in this stock market.”
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