Congress Strikes Deal on Debt Ceiling, Sends Markets Higher
After weeks of tense negotiations, Congress has finally reached a deal on the nation’s debt ceiling. The agreement, which was announced early Tuesday morning, will raise the debt limit and avert a potential default on U.S. debt.
The news sent stock futures climbing in pre-market trading, with investors breathing a sigh of relief after weeks of uncertainty. The Dow Jones Industrial Average and the S&P 500 both opened higher, with the latter hitting a new record high.
“The markets are essentially saying that they believe Congress will get this done,” said one strategist in an interview with Yahoo Finance.
The deal comes after weeks of wrangling between Democrats and Republicans in Congress over the debt ceiling. Democrats had pushed for a clean bill that would raise the limit without any strings attached, while Republicans had sought to tie any increase to spending cuts.
Under the agreement, the debt limit will be raised by enough to cover the government’s borrowing needs through the end of 2022. The deal also includes $480 billion in new spending over the next five years, including money for infrastructure, education, and healthcare.
Stocks continued to rise throughout the day, buoyed by the news of the deal and positive economic data. The yield on the 10-year Treasury note, a closely watched indicator of investor sentiment, fell as traders assessed the latest developments.
“The debt ceiling drama is over for now, and that’s a good thing for investors,” said one analyst. “But there will always be something else to worry about in the markets.”