Oct. 16 (Bloomberg) -- U.S. stocks gained, sending the Standard & Poor’s 500 Index higher for the fifth time in six days, as lawmakers rushed to lock up an agreement on raising the debt limit before tomorrow’s deadline.
Yahoo! Inc. and Mattel Inc. advanced at least 1.1 percent after reporting earnings that topped analyst estimates. Intel Corp. slipped 0.5 percent after saying manufacturing snags will delay a new line of processors.
The S&P 500 rose 0.6 percent to 1,708.93 at 9:39 a.m. in New York. The benchmark gauge slid 0.7 percent yesterday after rallying 3.3 percent over the previous four days. The Dow Jones Industrial Average gained 91.77 points, or 0.6 percent, to 15,259.78 today. Trading in S&P 500 stocks was 21 percent above the 30-day average at this time of day.
“If the market truly believed the U.S. will default on its obligations, we would see a more dramatic reaction from equity and bond markets,” Henk Potts, who helps oversee about $310 billion as a strategist at Barclays Wealth & Investment Management in London, said by phone today. “The great expectation is the deal will be done. If the deal is not done, however minuscule that chance that may be, it would have a devastating impact on sentiment.”
The S&P 500 has advanced 1 percent this month even as Congress failed to agree on a federal budget, forcing the first partial government shutdown in 17 years.
A framework being negotiated by Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell would fund the government through Jan. 15, 2014, and suspend the debt limit until Feb. 7. The proposal will probably be presented for a House vote by Speaker John Boehner and may win passage with a majority of Democrats and minority of Republicans, Representative Charles Dent, a Pennsylvania Republican, said in an interview on CNN.
With no deal, the U.S. would exhaust its borrowing authority tomorrow and the government may start missing payments at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office. Fitch Ratings put the world’s biggest economy on watch for a possible credit downgrade yesterday, citing lawmakers’ inability to agree.
“Reaching a broad agreement aside, there are still a few hoops to go through before it can be considered a done deal,” Jim Reid, a strategist at Deutsche Bank AG, wrote in e-mailed comments. “All eyes clearly will be on this today as we await for further developments from Capitol Hill.”
The Federal Reserve is scheduled to release its Beige Book of current economic conditions today.
Some 22 companies in the S&P 500 are due to post results today. Profits for companies in the index probably increased 1.4 percent during the third quarter while sales rose 2 percent, according to analysts’ estimates compiled by Bloomberg.
Yahoo, the biggest U.S. Web portal, advanced 1.1 percent to $33.74 as an influx of advertising dollars helped boost turnaround efforts by Chief Executive Officer Marissa Mayer.
Mayer, who took the helm of the largest U.S. Web portal in July 2012, is investing in product improvements to woo more users and marketers amid competition from Google Inc. and Facebook Inc.
Mattel climbed 4.3 percent to $43.34. The world’s largest toymaker topped estimates as sales of Barbie and American Girl gained. The company has been trying to boost sales amid lackluster growth of the toy industry in the U.S., the company’s largest market, as kids spend more time using electronic devices.
Intel declined 0.5 percent to $23.27. The chipmaker said manufacturing snags will delay the new Broadwell line of processors, denting confidence in its ability to roll out advanced technology that can win orders in the fast-growing market for tablets and smartphones.
The company also reported third-quarter earnings that exceeded analysts’ estimates.
Stanley Black & Decker Inc., the maker of power tools and electronic security systems, tumbled 14 percent to $76.64. The company cut its full-year earnings outlook on slower-than- anticipated improvement in margins in its security business and weakness in emerging markets, as well as uncertainty created by the U.S. government shutdown.
--With assistance from Nick Taborek in New York. Editors: Jeff Sutherland, Andrew Rummer
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