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Dow sucks 300 points on shutdown and oil prices



The Dow jumped over 300 points on Tuesday after US politicians provisionally agreed on a plan to avert another state suspension. Warehouses also got a step after Saudi Arabia decided to lower oil production. Nasdaq increased by 1.4% and the broader S&P 500 was 1.3%.
Congress negotiators said late on Monday that they reached an agreement in principle to avert a partial state suspension at the end of the week. The deal will not be final until Congress passes it and President Donald Trump writes it – which leaves much room for a new development to wet the deal. But Wall Street was optimistic that US lawmakers would avoid another crisis.

"The markets refrain from uncertainty, so this is spectacular news that eliminates one of the biggest obstacles to US economic growth and prosperity and better economic market conditions," said Chris Rupkey, chief economist at MUFG.

The last 5 weeks of closure, which ended last month, cost the US economy $ 1
1 billion – $ 3 billion, of which the economy will never recover according to Congress's budget office. It's not a big problem for America's nearly $ 20 billion. But this level of political imbalance made Wall Street concerned about the ability of politicians to agree on something much more serious: raising the US debt ceiling.

Over the next few months, legislators must vote to pay off debt America owes. If it does not, the United States can make its debt payments commonplace. It could signal that America will not repay its creditors, which can send a shock through the US financial market, which the government undertakes to fund its programs and compensate for its enormous budgetary shortage.

Credit rating agencies have already warned that they will cut US credit ratings if legislators do not increase the debt ceiling, which would increase the amount the government needs to pay for its debt payments. Credit rating agencies lower America's perfect AAA rating to AA + 2011 when the government came close to missing a debt settlement.

The suspension agreement gives investors hope that politicians will not push their feet back when the bet is potentially much higher.

Oil moves higher

OPEC, the oil cartel led by Saudi Arabia, announced Tuesday that it would reduce production by 800,000 barrels a day. The weakening investors' concerns that a global economic slowdown would continue to damage demand and that oil producers are not enough to slow down production.

The price of US commodity increased 2% Tuesday to $ 53.56 per barrel.

Oil has risen in recent weeks after the United States sanctioned Venezuela, a major supplier of crude oil around the world. The sanctions against Iran have also contributed to oil prices.

But increased crude production in the US has weighed on oil in the past year. The oil price can still rise between 10% and 15% this year due to OPEC's production cuts and sanctions, Francisco Blanch, head of global commodities research at Bank of America Merrill Lynch told Julia Chatterly on CNN's "First Move" Tuesday. 19659006] The energy stores were collected. Hess ( HES ) and Devon Energy ( DVN ) each jumped almost 3%.
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