Oct. 10 - Blue chips had their best daily gain of 2013 and the S&P 500 its second best amid early signs Washington is willing to avoid a debt default as early as next week. Conway G. Gittens reports.
Can Washington get its act together and avoid a debt default? Wall Street seems to think so after Republican leadership say they will offer a six-week extension to the debt ceiling and lawmakers are called to the White House for a chat. Investors interpreted a simply sign that the two sides are finally willing to talk as a major buy signal, sending the market up over two percent. But some investors say this is just the beginning and remember: what the market gives, the market can take away. S&P Capital IQ's Alec Young sets a timetable. SOUNDBITE: ALEC YOUNG, GLOBAL EQUITY STRATEGIST, S&P CAPITAL IQ (ENGLISH) SAYING: "We need to see follow through on all of this. We need to see the government shutdown incorporated into the recently announced debt ceiling negotiations and all this needs to happen fairly quickly. So I would say if by Monday we are not seeing progress we could expect volatility to return." Quick progress is also what officials gathering for International Monetary Fund and World Bank meetings in Washington want to see to avoid a global meltdown. World Bank President Jim Yong Kim: SOUNDBITE: JIM YONG KIM, PRESIDENT, WORLD BANK (ENGLISH) SAYING: "We are watching carefully and we just urge all policy makers to move quickly to come to some resolution, because the impacts are going to be severe." But for now, investors are convinced the two sides will come together - prompting the Dow's biggest one day move of the year and the S&P 500's second biggest. The economy, however, still showing signs it's just sputtering along. Comparison data for select retailers show shoppers continuing to shy away from apparel purchases last month, except for items on the sales rack. Experts say shoppers are watching their pennies after buying homes and cars during the summer, and not willing to spend much beyond that. Teva Pharmaceuticals is slashing its workforce by about 5,000. It's ironic. The world's largest maker of generic drugs is facing competition from even cheaper versions of its cheaper drugs. Teva hopes to save $2 billion a year by 2017. Major shares in Europe had their biggest rally in a month with stocks in France leading the pack.