U.S. stocks rally as Senate reaches deal to raise debt ceiling

Volatility Gauge

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, dropped 19% to 15.08, the biggest decline since April, after surging 16% yesterday.

Financial, health-care and phone companies rallied more than 1.5% today. The Dow Jones Transportation Average climbed 1.2%.

FedEx Corp. surged 2.3% to a record $122.87, adding to yesterday’s 4.1% advance. The operator of the world’s largest cargo airline authorized a buyback plan of as many as 32 million shares, its biggest repurchase program ever.

Bank of America jumped 2% to $14.53. Chief Executive Officer Brian T. Moynihan, 54, has said the “lion’s share” of costs tied to disputed mortgages are behind his bank after booking more than $45 billion tied to his predecessor’s 2008 takeover of Countrywide Financial Corp. after third-quarter profit beat estimates.

JPMorgan Chase & Co. surged 3.1% to $53.94 and Goldman Sachs Group Inc. advanced 2.7% to $161.87 for the biggest increases in the Dow.

KeyCorp gained 2.2% to $12.12 and PNC Financial Services Group Inc. advanced 1.7% to $73.76 after both banks beat third-quarter profit estimates. The KBW Regional Banking Index rose 1.3% as 49 out of 50 members gained.

Mattel, Abbott

Mattel climbed 1.1% to $41.99. The world’s largest toymaker topped estimates as sales of Barbie and American Girl gained. The company has been trying to boost sales amid lackluster growth of the toy industry in the U.S., the company’s largest market, as kids spend more time using electronic devices.

Abbott Laboratories jumped 6.2% to $35.81 for the biggest gain in the S&P 500. The provider of health-care diagnostics and medical devices reported third-quarter results that surpassed analyst estimates and raised its dividend by more than half. Revenue rose 2% to beat company estimates on increased demand for diagnostic tests. Abbott spun off its drug business into a new company earlier this year.

Stanley Black & Decker Inc., the maker of power tools and electronic security systems, tumbled 14% to $76.69 for the largest drop in the S&P 500. The company cut its full-year earnings outlook on slower-than-anticipated improvement in margins in its security business and weakness in emerging markets, as well as uncertainty created by the U.S. government shutdown.

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