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Stocks near record, Senate to the rescue

Wednesday, Oct 16, 2013 - 02:09

Oct. 16 - Summary: The S&P 500 approaches a record closing high after Senate announces deal that delays U.S. debt default; IBM has surprise sales miss; Card users push American Express sales, profits higher; JPMorgan's latest London Whale settlement. Conway G. Gittens reports.

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It's the kind of news Wall Street was hoping for. Senate leader reached a deal to re-open the government through the beginning of next year, but more importantly, avoid a debt default that threatened to once again bring global markets to their knees. The debt ceiling delay is only through February but at least that removes an ominous cloud hanging over the markets and the economy. David Kotok of Cumberland Advisors sees a clear reason to buy stocks. SOUNDBITE: DAVID KOTOK, CHIEF INVESTMENT OFFICER, CUMBERLAND ADVISORS (ENGLISH) SAYING: "This fight is now about how much the Federal deficit shrinks. Whether it goes down $200 billion or $300 billion or $500 billion is now not relevant. It is now in a downward path. Slow growth. Low inflation. Low interest rates. Bullish. Stocks are going higher." Higher indeed. Stocks rallied over one percent bringing the S&P 500 less than 5 points away from setting an all-new record close. Markets settled before final votes in the House and the Senate. The debate may be dying down but the real-world impact from the showdown is just emerging. A Federal Reserve summary of business conditions suggested the economy was growing modestly before the October 1st shutdown, but survey takers were more uncertain about the future because of the bitter battle. In a separate anecdote, sentiment among the nation's homebuilders edged backwards this month. Some blame is being pinned on Washington, while some on higher labor costs. After the close, Revenues at IBM unexpectedly dropped underscoring the reluctance of businesses to spend... But on the consumer front: sales and profits were up at American Express as shopped used their credit cards more. Before that: Bank of America surprised the street with a higher than expected profit as the company's turnaround shows success. But like other banks the mortgage business was weak. J.P. Morgan Chase has agreed to pay $100 million and admit wrongdoing in its latest London Whale settlement. The fine will be paid to the Commodity Futures Trading Commission. Wrapping up with a look at Europe, equities were mixed with French stocks hurt by the luxury sector.

Stocks near record, Senate to the rescue

Wednesday, Oct 16, 2013 - 02:09

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