Democratic and Republican Senate leaders announced a deal to raise the US debt limit ahead of a Thursday deadline and reopen the federal government, which has been closed since October 1.
Senate Democratic majority leader Harry Reid and Mitch McConnell, leader of the upper chamber’s Republican minority, declared the agreement on the floor of the Senate.
It was not immediately clear if the legislation would be introduced in the Senate or first in the House of Representatives, which would streamline the parliamentary process.
The Senate leaders had reportedly been close to an agreement since Monday. An effort on Tuesday by House Speaker John Boehner to put forward an alternative plan was thwarted when he was unable to gain the support of his own Republicans, who hold a majority in the lower chamber.
US stocks rallied on the news of a possible agreement to end the crisis before Thursday when the US Treasury said it could be at risk of default on government obligations if the $16.7 trillion debt limit is not raised.
The blue—chip Dow Jones Industrial Average was up 1.2 per cent.
The broader Standard & Poor’s 500 Index gained 1.3 per cent in the afternoon session.