NY Stock Market Rises... US Default Avoided 'Positive Signal' · Putin Announces "Gas Supply Expansion" (Summary)

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Major indices on the New York Stock Exchange closed higher, overcoming significant losses as expectations grew that the U.S. could avoid a national default crisis. Russian President Vladimir Putin’s efforts to ease concerns over the sharp rise in natural gas prices were also identified as a factor lifting the market.

On the 6th (local time), the Dow Jones Industrial Average rose 102.32 points (0.30%) to close at 34,416.99, the S&P 500 index gained 17.83 points (0.41%) to 4,363.55, and the Nasdaq index increased by 68.08 points (0.47%) to finish at 14,501.91.

The major New York stock indices started lower, reflecting concerns that monetary policy normalization could be accelerated after the positive ADP private employment data was released before the market opened.

The situation reversed in the afternoon. Investor sentiment revived after Senate Republican Leader Mitch McConnell proposed a temporary extension of the debt ceiling until December.

With bipartisan tensions easing and fears of a U.S. national default on the 18th, as previously warned, diminishing, there was an increase in risk asset preference.

Although uncertainty remains as the Democrats avoided giving a direct response to the Republican proposal and insisted on raising the debt ceiling rather than a temporary extension, the narrowing gap between the two parties raised hopes of averting a catastrophe.

The Democrats canceled the procedural vote planned for the day to override Republican opposition to raising the debt ceiling.

On this day, airline stocks notably declined. Goldman Sachs downgraded its investment ratings on American Airlines and JetBlue, citing expectations that rising oil prices would burden airline earnings. Shares of other airlines such as Delta and United also plunged sharply.

Shares of data analytics firm Palantir rose 1% following news of a supply contract with the U.S. military.

PepsiCo closed up 2.6% after raising its annual earnings forecast.

U.S. crude oil inventories increased, and the possibility of emergency oil supply pushed oil prices down. West Texas Intermediate (WTI) crude closed at $77.43 per barrel, down $1.50 (1.9%).

U.S. natural gas futures also plunged more than 10% just one day after hitting a 12-year high.

On the same day, Russian President Vladimir Putin mentioned that he had instructed Russian energy company Gazprom to explore ways to increase natural gas supplies to Europe. President Putin emphasized, "Speculation does not help at all."