U.S. equities posted modest gains over the past week as investors pored over updates on the debt ceiling deadlock in Washington, while digesting a slew of key economic readings.
For the week ending Friday, the Dow Jones rose 1.2%, while the technology-rich S&P 500 and Nasdaq Composite climbed 0.8% and 0.1%, respectively.
The S&P US Listed China 50 Index, which is designed to track the performance of the 50 largest Chinese companies listed on the US stock exchanges by total market capitalization, posted a weekly jump of 6.6%.
Uncertainty around the US debt ceiling had been a drag on the market and investors were partly relieved by the recent progress.
The U.S. Senate on Thursday night approved a bill to extend the debt ceiling until early December, after Democrats and Republicans reached a deal to temporarily avert economic disaster, after weeks of partisan fighting over the question.
The deal came as Congress faces an Oct. 18 deadline to take action. US Treasury Secretary Janet Yellen recently warned that lawmakers had until then to raise or suspend the debt limit before the federal government was likely to run out of cash and extraordinary measures and states -United do not default on the national debt.
“While the deal will only postpone this issue until December 3, when they need to fix it again, it’s an issue we won’t have to deal with now,” Kevin Matras, executive vice president of Zacks Investment Research said in a note, adding “of course nothing gets done in Washington until it’s done.”
âWhile no one really expected this to go unresolved and risk a default, you never know,â he said.
The debt limit, commonly known as the debt ceiling, is the total amount of money the U.S. government is allowed to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, interest on the national debt and other payments.
Wall Street has also analyzed the latest data to assess the shape of the economic recovery.
U.S. employers created 194,000 jobs in September, indicating that the labor market recovery continues to slow amid a wave of COVID-19 fueled by the Delta variant, the U.S. Department of Labor reported on Friday. Economists polled by the Wall Street Journal predicted 500,000 new jobs.
“Job gains continue to be slow despite the $ 5 million shortfall from the pre-pandemic peak and a record number of job vacancies,” Will Compernolle, senior economist at FHN Financial said on Friday, in a note.
âThe Delta wave likely impacted labor supply and consumer spending to some extent in September,â Compernolle said.
At the same time, a separate report from the Department of Labor said on Thursday that the first jobless claims in the United States, a rough way to measure layoffs, fell from 38,000 to 326,000 during the week ending October 2. This was lower than the estimated 345,000 economists.
On another economic front, the US Services PMI (Purchasing Managers Index) posted 61.9% in September, up 0.2 percentage point from the August reading of 61.7% , the Institute for Supply Management reported on Tuesday. The reading exceeded market expectations.