By Yasin Ebrahim

Investing.com – The S&P 500 slashed its losses Wednesday, after Republicans signaled support to extend the ceiling at least temporarily, easing fears about U.S. default and paving the way for bullish bets on stocks to resume.

It fell 0.2%.

According to reports, Mitch McConnell, Senate Minority Leader is ready to extend the December debt ceiling to Democrats. This news is coming ahead of the vote in the Senate to suspend the debt limit to December 2022, which is likely to fail.

Ahead of the vote, investors didn’t’ appear eager to bet on a U.S. default as 5-year credit default swaps default risk pricing on the U.S. debt ceiling has only “edged up a smidge in the past 2-3 weeks and 4-week bill yields are little changed again this morning,” Scotia Economics said.

Megacap technology was at the forefront of the movement.

Other than Apple (NASDAQ) and Microsoft (NASDAQ), Amazon.com.com. (NASDAQ), and Alphabet.com. (NASDAQ), were all in the green.

The downside in the market was dampened by energy’s fall, as a result of a sudden increase in weekly oil supplies.

Analysts expected a draw of 41,000 barrels. However, crude inventories have increased by 2.346million barrels.

The gains in other parts of the energy sector were reversed after Russian President Vladimir Putin stated that Russia was ready to provide more natural gas to alleviate the current energy crisis.

Investors are worried that rising energy prices will lead to higher inflation, despite the fact that the strength of recovery is uncertain.

These fears are playing out in the bond market, where the catalyst driving Treasury yields has switched from rising real yields to a “lift in breakevens – indicative of rising stagflation worries due to the rent lift in energy prices,” Daiwa Capital Markets said in a note.

The gains in natural gas were reversed elsewhere in the energy system after Russian President Vladimir Putin declared that Russia will supply additional natural gas to alleviate the continuing energy shortage.

Investors are worried that rising energy prices will lead to higher inflation, despite the fact that the recovery’s strength is uncertain.

These fears are playing out in the bond market, where the catalyst driving Treasury yields has switched from rising real yields to a “lift in breakevens – indicative of rising stagflation worries due to the rent lift in energy prices,” Daiwa Capital Markets said in a note.

The five-year Treasury Inflation Protected Securities (TIPS), which have a breakeven inflation expectation, rose to 2.61% in late July. Meanwhile, the TIPS for the 10-year period climbed to 2.45%. This is the highest level since June.

Others cyclical industries were also affected, including industrials and financials. However, data showed that the economy had created more private jobs than usual last month.

ADP private payrolls increased by 568,000 in September. That beats economists expectations of an increase of 450,000. The reason was service-industry hiring.

General Motors (NYSE 🙂 has unveiled plans to increase revenue by doubling annually and improve margins over the next decade.

Moderna (NASDAQ:) fell 5% after Sweden’s public health agency suspended use of the company’s COVID-19 vaccine for anyone born in and after 1991 because of increased risk of heart inflammation.