Tuesday saw an increase in the S&P 500 following a tentative agreement on lifting the U.S. debt ceiling between Republican lawmakers and the Biden administration.
While the Nasdaq Composite rose 1.3%, the broader market index increased by 0.5%. The Dow Jones Industrial Average labored and fell short of the flat line.
President Joe Biden and House Majority Leader Kevin McCarthy came to an agreement over the weekend to extend the debt ceiling and prevent a default, and Congress is expected to vote on the legislation as early as this Wednesday. There has been no indication from lawmakers that they plan to head back to Capitol Hill early to work on the agreement. The bill accord requires the backing of both Republicans and Democrats to be approved.
The major danger had been that political constraints would prevent an agreement from coming together, according to economists at Goldman Sachs, “even though the upcoming votes in Congress still pose a small risk.” “It seems very likely to pass both chambers of Congress in the coming week now that a deal has been reached,”
The deal was reached only a few days before the so-called “X date” on June 5, which is the earliest time the Treasury Department has said the United States could default on its debt obligations. On Saturday night, the basic compromise was initially revealed.
Investors were concerned that a default on US debt could occur as a result of the protracted negotiations between the White House and legislative leaders. Wall Street already battles against ongoing inflation and this year’s banking catastrophe.