Wall Street extends its rally as Senate reaches a deal on debt ceiling.

U.S. stocks jumped on Thursday, adding to Wednesday’s gains, as investors reacted with relief to the news of an agreement in the Senate to raise the federal borrowing limit and pull the country from the brink of a debt default.

The S&P 500 gained about 1.5 percent in early trading, while the Nasdaq composite was up 1.6 percent. European stock indexes also rallied on Thursday, rebounding from a sharp decline the day before. The Stoxx Europe 600 was up 1.5 percent.

The rally picked up steam after top Senate Democrats and Republicans in the Senate on Thursday said they had struck an agreement that would allow the debt ceiling to be raised through early December.

“It’s our hope that we can get this done as soon as today,” Senator Chuck Schumer of New York, the majority leader, said on the Senate floor. He did not offer details about the agreement.

Senator Mitch McConnell of Kentucky, the minority leader, had said on Wednesday that Republicans would allow Democrats to vote on a short-term extension after weeks of disagreement over raising the debt ceiling. News of Mr. McConnell’s offer helped Wall Street rebound in late trading on Wednesday and end the day with a small gain.

Initial jobless claims for regular benefits declined last week, falling 38,000 to 326,000 after three consecutive weekly increases. For the week ending Sept. 18, about 4.2 million people were receiving some form of unemployment assistance, down 854,638 from the previous week.

“The combination of easing labor supply constraints, strong labor demand and an improving Covid outlook should spur further labor market progress in coming months,” Lydia Boussour, lead U.S. economist at Oxford Economics, wrote in a note.

Investors will also be keeping an eye on the monthly jobs report for September, set to be released on Friday. Economists surveyed by Bloomberg are forecasting that the U.S. economy added 500,000 jobs during the month, a sharp gain from the 235,000 added in August.

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