* Republicans unveil plan to temporarily raise U.S. debt
* Dow soars 320 points, S&P posts biggest percentage gain
since Jan. 2
* CBOE Volatility index plunges to near level before
* Futures fall in after-hours trading
* Indexes up: Dow and S&P 2.2 pct, Nasdaq 2.3 pct
By Rodrigo Campos
NEW YORK, Oct 10 Major U.S. stock indexes posted
their strongest rally in more than nine months on Thursday after
signs of progress in negotiations to raise the U.S. debt limit.
The market rally left the S&P 500 less than 2 percent away
from its record closing high set three weeks ago, with traders
now focused on an earnings season that begins in earnest on
Friday with results from top banks JPMorgan and Wells Fargo.
However, more than two hours after the close of regular
trading, equity futures contracts dipped on reports that
President Barack Obama rejected a Republican plan to extend the
debt ceiling by several weeks because it did not also end the
partial government shutdown.
"The activity in multiple asset classes will be very
sensitive for the next few days. We are watching this very
closely like everyone else. Some people have been going into
cash. I wish we were all focusing on matters of economics and
earnings, but we are unfortunately trading on this soap opera,"
said Michael Cuggino, president and portfolio manager at
Permanent Portfolio Funds.
House Republican leaders acted to break a logjam in
negotiations by proposing a bill to raise the federal
government's debt limit without attachments. The move was a
significant shift for Republicans, who had tried to use the
must-pass legislation to extract concessions from Democrats on
spending and gutting the new healthcare law known as Obamacare.
Their proposal, which they planned to present to President
Obama at the White House, would postpone the threat of a U.S.
default from Oct. 17 until the middle or end of November. The
federal government would remain in a partial shutdown.
"What this is, is opening the door to discussion and
negotiation when before we had two sides just finger pointing,"
said Peter Jankovskis, co-chief investment officer at OakBrook
Investments LLC in Lisle, Illinois.
"We don't know if in six weeks we'll be in the same place,
but at least this opens the possibility" of a lasting deal, he
In after-hours trading, S&P 500 E-mini index futures
fell about 12 points after The New York Times reported on
Obama's opposition to the Republican plan.
However, futures quickly pared those losses on news that
Obama had neither accepted nor rejected the GOP proposal, and
that talks were continuing. The E-minis were trading at 1682.25,
down 2.75 points from the close at 4:15 pm ET (2015 GMT).
The CBOE Volatility index, often used to measure the
level of investor anxiety, plunged 15.9 percent to 16.48, near
the level it was at in late September, prior to the U.S.
The Dow Jones industrial average rose 323.09 points
or 2.18 percent, to 15,126.07, the S&P 500 gained 36.16
points or 2.18 percent, to 1,692.56 and the Nasdaq Composite
added 82.971 points or 2.26 percent, to 3,760.747.
The S&P posted its largest daily percentage gain since Jan.
2, when yet another market pullback was reversed after
politicians reached an agreement regarding the so-called fiscal
In one of the few economic indicators that continues to be
published amid the federal government partial shutdown, data
showed the number of Americans filing new claims for jobless aid
touched a six-month high last week. A computer-related backlog
of claims was processed and the partial government shutdown hit
some non-federal workers.
This year's high-flying tech stocks rebounded after several
days of declines. Facebook was up 4.9 percent to $49.05,
Best Buy gained 7.5 percent and Netflix rose
5.4 percent. Among the year's best performers on the S&P 500,
the stocks were the top drags in the market's recent decline.
Citrix Systems Inc shares were off 11.9 percent to
$58.75 after the cloud-computing software maker estimated
quarterly results below analysts' expectations because
businesses had delayed contracts.
About 98 percent of the S&P 500 components posted gains. On
the NYSE, more than six issues rose for every one that fell and
on Nasdaq winners outnumbered losers by a ratio of 5.3 to 1.