US stock indices surge most since January

Hopes that the US is on the path to avoiding a default have helped drive stocks up sharply on Wall Street.

With less than an hour to the close of the stock market in New York, the leading index benchmarks were on course for their best performance since the beginning of the year.

The Dow was up 1.55% or 230 points at 15,032, while the S&P 500 and NASDAQ 100 both soared more than 2%.

The buoyancy came from news that Republicans were willing to offer a temporary increase in the debt ceiling. In return they want talks with the President regarding budget and deficit issues.

President Obama has indicated he wants an end to the shutdown as well as a rise in the debt ceiling, but he is due to meet congressional leaders later today at the White House in order to consider their proposal.

Until a bill is passed to guarantee the US will avoid a default, proceedings in Washington are going to continue to dominate the stock market. The US earnings season gets into full swing tomorrow, however, with JP Morgan and Wells Fargo both set to report, which should garner some measure of attention from investors.

Third-quarter earnings of $1.28 per share are expected for JP Morgan , compared with the $1.40 per share that the company made in the same quarter last year.

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