The broad indices strengthened late in the trading session, on the 14th day of the partial shutdown of the federal government. After Republican leaders in the House of Representatives late last week met with President Obama but failed to come to an agreement, Senate leaders have been working toward a compromise for the government to resume full operations and for an increase in the $16.7 trillion debt limit.
U.S. Treasury Secretary Jack Lew has repeatedly warned that the government could run out of money to pay its bills by Oct. 17, without an increase to the debt limit, although some analysts have said the government could probably go on operating until the end of October.
Politico on Monday reported that Senate Majority Leader Harry Reid (D., Nev.) had "privately" offered a deal to Senate Minority Leader Mitch McConnell (R., Ken) that would fully reopen all federal agencies at least until "mid-to-late December," while also extending the debt ceiling so that the government wouldn't hit its next debt limit until 2014. This would provide plenty of breathing room for negotiations between leaders of Congress and Obama, however, investors have learned to expect no deals until the last possible moment.Later Monday afternoon, Reid on the Senate floor said he was "very optimistic" he would reach a deal with McConnell. A meeting at the White House between Obama and congressional leaders scheduled for 3 p.m. ET, was postponed to allow the Senate leaders to continue negotiating. The KBW Bank Index (I:BKX) rose 0.6% to 63.92, with all but one of the 24 index components ending with gains.