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U.S. stocks open higher on budget deal hopes; Dow Jones up 0.68%

Published 10/16/2013, 09:44 AM
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Investing.com - U.S. stocks opened higher on Wednesday, as investors hoped for progress on the U.S. budget front amid growing concerns over a potential sovereign default.

During early U.S. trade, the Dow Jones Industrial Average 0.68% rise, the S&P 500 index 0.72% increase, while the Nasdaq Composite index 0.62% gain.

Senate leaders were to resume negotiations on reopening the government and lifting the federal borrowing limit later Wednesday, after a last minute deal put forward by House Republicans collapsed.

On Tuesday, ratings agency Fitch placed its triple-A rating on the U.S. on “rating watch negative”, saying the political impasse has undermined confidence in U.S. economic policy.

The U.S. Treasury has said that if an agreement to raise the USD16.7 trillion debt ceiling is not struck ahead of Thursday’s deadline, the U.S. will face an unprecedented sovereign debt default.

Apple shares climbed 0.57%, even as the Wall Street Journal reported that the tech giant was cutting orders for its low-cost iPhone 5C, raising concerns about weak demand.

The decision came a day after Apple announced that Burberry CEO Angela Ahrendts will join the iPhone maker as senior vice president of retail and online sales next year.

Also in the tech sector, Intel slipped 0.26%, as the chipmaker said manufacturing snags will delay the new Broadwell line of processors, dampening confidence in its ability to roll out advanced technology that can win orders in the tablets and smartphones market.

Elsewhere, Bank of America reported earnings that topped expectations and reversed a year-ago loss, as provisions for credit losses declined, sending shares up 1.33%.

PepsiCo was also on the upside, rallying 1.84%, after the beverage and snack maker posted higher earnings and said it was on track to meet its financial goals for the year.

Other stocks expected to be in focus included American Express, Ebay and IBM, scheduled to report quarterly earnings after the closing bell.

Across the Atlantic, European stock markets were lower. The EURO STOXX 50 dipped 0.05%, France’s CAC 40 declined 0.67%, Germany's DAX eased 0.04%, while Britain's FTSE 100 fell 0.20%.

During the Asian trading session, Hong Kong's Hang Seng Index shed 0.46%, while Japan’s Nikkei 225 Index added 0.18%.


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