Market Report: Stocks Rise on Hopes of D.C. Deal
COLUMBIA - Stocks fell sharply at the beginning of the week because fear of a U.S. debt default, but at the end of the week, stocks shot up when investors thought lawmakers were close to reaching a deal to extend the nation's borrowing limit.
The Dow Jones Industrial Average finished the week up 1.09 percent to finish at 15,237.11, including a 300-point gain Thursday when a government deal seemed close.
The NASDAQ was the only major index to finish down, but dropped only 15.88 or .42 percent to close at 3,791.87
The S&P 500 closed at its highest mark since September, up .75 percent on the week to 1,703.20.
While investors might be optimistic a government deal is close, consumers are pessimistic about the economy. Consumer sentiment dropped to a nine-month low of 75.2, down from 77.5 according to the Thomson Reuters/University of Michigan index.
It also might be time for a fill up. Gas prices have been low recently due to a general market decline since the government shutdown began a lack of military conflict, and the fact that there haven't been any major storms so far during hurricane season. Some experts say a government deal and the expectation of conflict in Libya could move prices back up.
There was good news in housing this week as applications for mortgage loans were higher for last week and the number of foreclosures has gone down over the past few months, according to CNBC. The reasoning for the increase in loans is lower mortgage rates, but a government default in four days would send those rates soaring.
The government default is the big thing to watch this week. Jobless claims on Thursday and the Consumer Price Index, which shows inflation, on Wednesday are the major reports, but a government default would dwarf either of those.
For the average American, the U.S. default would mean stoppages or at least disruptions in all government payments including food stamps, unemployment benefits, and social security. Missouri's Medicaid program would be affected as well according to the state's budget director.
Since a U.S. default has never happened before, it's tough to know what exactly will happen, but for the purposes of scale, the U.S's $12 trillion dollars of debt is 23 times what Lehman Brothers defaulted on, and helped drive the U.S. into its most recent recession.