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Stocks climbed on Wednesday, with the Dow adding nearly 200 points, as investors were encouraged that lawmakers would strike a last-minute deal to prevent the country from defaulting on its debt.
Major averages took a leg higher after Reuters reported that U.S. Senate negotiators are "very close" to announcing a deal on extending the debt ceiling.
The Senate is likely to move "quickly" to pass a fiscal debt deal currently being negotiated, according to a Senate aide. Senate leaders are in talks with House leaders to find a way to win fast passage of the deal in both chambers.
The Dow Jones Industrial Average rallied from Tuesday's sell-off and was up 183 points, or 1.2 percent in early morning trading, boosted by UnitedHealth and JPMorgan.
The S&P 500 and the Nasdaq also climbed over 1 percent each. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 18.
All key S&P sectors opened in positive territory, lifted by health care and energy.
Senate leaders were expected to continue negotiations at noon ET Wednesday, after a failed attempt in the House of Representatives to hold a vote on a short-term funding bill.
"Just a day before the Treasury's new borrowing authority is set to expire, and, after yesterday's House effort predictably came to naught, the ball is now back in the court of the Senate to craft a compromise," Chris Scicluna, an economist at Daiwa Capital, said in a morning research note.
After the closing bell on Tuesday, Fitch credit rating agency placed the United States' triple-A rating on "rating watch negative," citing the debt ceiling gridlock. Fitch's move echoed a similar action by Standard & Poor's in August 2011, when the ratings agency downgraded the U.S. credit rating because of political gridlock related to the debt ceiling.
"With just hours to go until the [debt] deadline, nerves will be playing on traders' minds as they will continue to be on U.S.political headline watch. As a result, trade will be extremely choppy until we get an outcome," said Stan Shamu, market strategist at IG.
The National Association of Home Builders' housing market index for October was due at 10 am ET. And the Federal Reserve's "beige book," a survey of regional economic activity was expected at 2 pm ET.
Late Tuesday, Twitter chose the New York Stock Exchange for its much-talked-about stock market debut. The social-media company has also selected Nov. 15 as a tentative date to begin trading, people familiar with the matter told CNBC. The stock will trade under the ticker symbol "TWTR."
Tech companies have traditionally gravitated toward Nasdaq, but several glitches, including during Facebook's IPO, have made some rethink.
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