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Stocks rise on news of expected deal on government default, shutown

By DOUG THOMPSON - Capitol Hill Blue
October 14, 2013

Trader William Lawrence on the floor of the New York Stock Exchange. (AP/Richard Drew)

Trader William Lawrence on the floor of the New York Stock Exchange.
(AP/Richard Drew)

Talk of a pending deal to stave off a government default on obligations and possible reopening of federal agencies sent stocks back up Monday, reversing an earlier loss and sending optimism around the floor of the New York Stock Exchange.

“We expect there will be an agreement in the next day or so, but there’s a lot of fear,” said Ralph Bassett, deputy head of North American equities at Aberdeen Asset Management in Philadelphia.

Stocks dipped earlier in the day following to reach any kind of deal to end the stalemate but Majority Leader Harry Reid and Minority Leader Mitch McConnell joined together on the Senate floor Monday afternoon and expressed confidence that a deal would be reached and the matter resolved before the government defaults on its debts Thursday.

“Bringing everyone together was enough to get us to come back after opening quite a bit lower,” Bassett told Reuters Monday, “but we’re still under the assumption that we’re at an impasse.”

Economists view a government default as catastrophic and also feel that the government shutdown, now in its third week, is driving down the GDP.

Still, expectations that a deal is near was enough to reverse the downward trend and offset the early morning fears.

“Let’s hope we can get through this thing and move forward,” a trader told Capitol Hill Blue in an email on Monday.  “We’ve got our fingers crossed.”

 

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