U.S. stocks did not get much of a lift early Thursday after the U.S. House of Representatives approved a debt ceiling deal the night before that would avert global financial turmoil and an all-but-certain recession.
The S&P 500 rose about 5 points, or 0.13%, while the Dow Jones industrial average fell 115 points, or 0.35%, just after 10 a.m.
Traders took news of the positive debt ceiling in stride in part because stocks never fell ahead of the vote based on expectations that Congress would eventually agree to avoid a default, said Jason Ware, chief investment officer at Albion Financial Group. He also says that the legislation is still awaiting a decision in the US Senate in the coming days.
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“Stocks have been resilient throughout this episode of DC brinksmanship,” says Ware. “Investors have essentially said, ‘We’ve seen this movie before,’ and so there’s no need to recover when we get to the other side of this danger.
Rather, he says, investors may go back to worrying about a more familiar set of ailments — inflation, Fed rate hikes and the risk of a recession.
“Now back to our regular schedule,” says Ware.
The S&P closed Wednesday at 4,180, up 9.3% so far this year.
In Asia, stock indexes were mostly higher overnight after the debt deal, although enthusiasm was tempered by worries about the Chinese economy.
Japan’s benchmark Nikkei 225 rose 0.3% in morning trade to 30,976.43. Australia’s S&P/ASX 200 rose 0.3% to 7,109.40. South Korea’s Kospi quickly lost early gains to fall 0.4% to 2,567.86. Hong Kong’s Hang Seng jumped 0.8% to 18,381.63, while the Shanghai Composite added 0.4% to 3,216.86.
Major stock indexes in Europe also rose on news of the US debt ceiling, with Germany’s DAX up 1% and London’s FTSE up 0.3%. A report showing lower-than-expected inflation in the eurozone also boosted shares.
If the debt deal also passes in the Senate, government checks would continue to go out to Social Security recipients, veterans and others and would prevent economic upheaval at home and abroad, ahead of Monday’s deadline when the Treasury Department has said the U.S. will run out of money to pay their debts.
Contributor: Associated Press