Dow erases losses as hopes grow for deal

Stocks on Wall Street opened in the red today, after a deal to raise the debt ceiling failed to materialise over the weekend, but have rallied on reports of progress between Republicans and Democrats in the Senate.

Nerves are getting a little frayed on Wall Street as we step ever closer to the 17 October deadline that could see the US at risk of default.

Stocks ended last week strongly, with a prevailing feeling amongst market participants that a deal would emerge over the weekend from talks between Senate Democratic Leader Harry Reid and Republican Leader Mitch McConnell.

As has become a hallmark of these fiscal negotiations, though, progress has been sluggish and the absence of any deal pressured stock markets earlier in the day, with the Dow trading down more than 100 points at one point. Stock prices later bounced though, after Harry Reid said the Senate is ‘getting closer’ to a deal.

By early afternoon in New York, the Dow was up 0.14% at 15258 and the S&P500 gained the same percentage, keeping it above the 1700 level.

President Obama is scheduled to meeting with congressional leaders at the White House at 8pm BST. Even if a deal can be agreed today, there are questions over whether the bill can be put through both the Senate and the House of Represetatives in time to beat the 17 October deadline.

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