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Stocks soar after Obama signals progress on debt limit talks

Stocks add to gains after press briefing by president. With a surge of 200 points before falling back, Dow having its best day in three months as investors pile into stocks.

By JeeYeon ParkCNBC.com Writer / July 19, 2011

In this July 18, 2011, photo, specialist Neil Gallagher (foreground right) works at his post on the floor of the New York Stock Exchange. Stocks surged after President Obama announced 'some progress' in debt limit talks.

Richard Drew/AP

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Stocks jumped sharply Tuesday, extending their previous gains, following a handful of upbeat corporate earnings and after President Obama's statement about the ongoing debate on how to cut the deficit and raise the debt ceiling.

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The Dow Jones Industrial Average surged, led by IBM and Coca-Cola, after ending sharply lower in the previous session. The blue-chip index was up 206 points at its session high and is having its best day since Apr. 20.

The S&P 500 and the tech-heavy Nasdaq also rose. The CBOE Volatility Index, widely considered the best gauge of fear in the market, slid below 20.

Most key S&P sectors were higher, led by techs and consumer discretionary.

Stocks added to previous gains after President Obama endorsed the debt deal proposed by the bipartisan "gang of six" senators to cut the deficit by more than $4 trillion.

"It certainly seems like they're trying to get a deal...and that will take one uncertainty out of the market," said Joe Saluzzi, co-manager of trading at Themis Trading. "Now it's just a question of what kind of deal it will be."

'As of right now, [stocks are] going to rally on any chance of a deal," said Saluzzi.

“Markets are swinging on a pendulum between macro and microeconomic issues,” said Nicholas Colas, chief market strategist at ConvergEx Group. “It’s hard to know which side of the fence the metronome’s going to swing.”

On the earnings front, Wells Fargo posted a higher quarterly profit as the bank dipped into funds previously set aside for bad loans.