Stocks rally after debt agreement is reached

NEW YORK (AP) ? Stocks are rallying after President Barack Obama and Congressional leaders announced that they had agreed on a deal to raise the nation’s borrowing limit ahead of Tuesday’s deadline.

The Dow Jones industrial average jumped 85 points, or 0.6 percent, to 12,227 shortly after the market opened. Stock indexes in Asia and Europe also rose sharply.

Investors are expecting the deal to pass Congress as early as Monday. The agreement would raise the U.S. debt limit by $2.1 trillion. It would also cut at least $2.4 trillion in spending over 10 years.

It’s not clear whether the deal would prevent a downgrade to U.S. debt.

The Standard and Poor’s 500 index is up 12 points, or 0.9 percent, to 1,304. The Nasdaq composite is up 32, or 1.2 percent, to 2,788.