By CHRISTOPHER S. RUGABER
WASHINGTON (AP) â¿¿ The budget agreement Congress reached Wednesday cheered investors and removed the threat of a catastrophic debt default that could have triggered another recession.
Yet the temporary nature of the deal means a cloud will remain over a sluggish U.S. economy that was further slowed by the government's partial shutdown.
Political fights over taxing and spending will persist over the next few months. The risk of another government shutdown and doubts about the government's borrowing authority remain. Businesses and consumers may still spend and invest at the same cautious pace they have since the Great Recession officially ended more than four years ago.The agreement, expected to be approved by the House and Senate late Wednesday, will reopen the government but only until Jan. 15. The deal would enable the United States to keep borrowing to pay its bills, but not past Feb. 7. The deal followed a two-week shutdown and came a day before a Treasury Department deadline to raise the nation's $16.7 trillion debt limit. "The good news is that we avoid hitting the debt ceiling and all the risks that entails," said Joel Prakken, co-founder of Macroeconomic Advisers, a forecasting firm. "The bad news is ... this hasn't produced any clarity. We're going to be right back at this again after the turn of the year." The stock market soared on the news. The Dow Jones industrial average jumped 206 points. Bond investors celebrated, too. They sharply drove down the yield on the one-month Treasury bill, which would have come due around the time a default could have occurred. And the yield on the 10-year Treasury, a benchmark for rates on mortgages and other loans, fell. Investors may now turn to what typically moves stock prices: corporate earnings and economic data. Wall Street is in the midst of earnings season.