The stock market rallied on Wednesday afternoon after both the House Speaker Kevin McCarthy followed by President Joe Biden expressed signs of optimism that a compromise was forthcoming.
The markets have been shaky in recent days due to the risk of defaulting on sovereign debt, which most analysts predict would be devastating to the United States economy and global markets as a whole.
The Treasury Secretary Janet Yellen has been warning the government for weeks that the government might not be able to pay its bills just a few weeks into early June. While unemployment would rise and GDP would drop dramatically, it seems lawmakers are on a pathway to preventing such a catastrophe.
The President stated, “Every leader in the room understands the consequences of failure.” Raising the debt ceiling does not mean authorizing new spending.
The Dow Jones rose 1.24%, +408.63, to 33,420.77. The Nasdaq rose 1.28%, +157.51, largely due to the positive tone coming out of Washington D.C..
President Biden said he would have an update on talks on Sunday after a limited trip to Asia. Regional Banks were among the biggest winners. The Spider S&P Regional Banking ETF was up more than 7.5%.
Additionally, banks such as Western Alliance sounded an optimistic tone when it came to deposit growth, with the bank claiming deposit growth exceeding $2 billion in the quarter.
The bank, along with other banks such as Zionz Bancorporation, rallied to see double digit gains before the closing bell.