Stock Market Today: Debt-Ceiling Band-Aid Gets Stocks Into the Green

Another day, another change of direction for the stock market?

That looked to be the case early Wednesday, with stocks widely down following Tuesday's rally, which itself followed a lousy Monday for equities. But a turn of events in America's debt-crisis saga gave stocks an afternoon jolt.

Senate Minority Leader Mitch McConnell, in response to recent pressure from both his Democratic congressional peers and President Joe Biden, offered up a temporary fix, saying Republicans will "allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December."

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Temporary relief, yes, but it was enough to send equities into modest positive territory. The defensively minded utilities (+1.6%) and consumer staples (+1.0%) sectors improved the most, but technology and tech-esque mega-caps such as Microsoft (MSFT, +1.5%), Amazon.com (AMZN, +1.3%) and Google parent Alphabet (GOOGL, +1.1%) also enjoyed a decent updraft.

That helped lift the Nasdaq Composite 0.5% to 14,501; the S&P 500 (+0.4% to 4,363) and Dow Jones Industrial Average (+0.3% to 34,416) also finished in the green.

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Other news in the stock market today:

• The small-cap Russell 2000 improved in the afternoon, too, but still finished down 0.6% to 2,215.
• Affirm Holdings (AFRM) surged 20.0% today after Target (TGT, -0.3%) unveiled a new partnership with the "buy now, pay later" company ahead of the holiday shopping season. "We know our guests want easy and affordable payment options that work within their family’s budget," said Gemma Kubat, Target's president of financial and retail services in the retailer's blog post. AFRM is now up roughly 180% since its May lows near $48.
• Dow Inc. (DOW, -3.3%) was the industrial average's worst stock today. The decline came after Chief Financial Officer Howard Ungerleider outlined plans at the chemical company's annual investor day for DOW to get carbon neutrality by 2050. Ungerleider also said these efforts, along cost-cutting efforts, will help the company realize $3 billion in EBITDA (earnings before interest, taxes, depreciation and amortization) growth.
• U.S. crude futures retreated 1.9% to $77.43 per barrel. The pullback from crude oil's highest level in six years – which also snapped a five-day winning streak – came amid reports suggesting Russian President Vladimir Putin is increasing gas supplies to Europe in order to stabilize the market.
• Gold futures eked out a 0.05% gain to settle at $1,761.80 an ounce.
• The CBOE Volatility Index (VIX) slipped 1.2% to 21.05.
• Bitcoin prices reached their highest point since May, rocketing 7.5% higher to $55,083.96. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

Why You Shouldn't Fear a Correction

"Volatility is the price of admission."

Those words come from LPL Financial Chief Market Strategist Ryan Detrick in the wake of the S&P 500's first 5% pullback of 2021. Investors would be wise to embrace that thought as numerous analysts float the idea of a deeper retreat before 2021 is through.

And remember: Corrections aren't a death sentence.

"As shown in the LPL Chart of the Day, since 1980, stocks experience a 14.2% peak-to-trough pullback on average during the year, putting the recent 5% pullback in perspective. In fact, 21 out of the past 41 years saw at least a 10% correction. Incredibly, 12 of those years finished in the green and those 12 years gained an average of 17.0%. … In other words, big pullbacks can happen even in years that see outsized gains."

The key to maintaining your sanity? Build a sturdy portfolio core that you're confident can grow steadily over the long-term, and use occasional corrections to go on the offensive.

For one, you could use any dips to invest in long-term mega-trends such as the rise of solar power and the global need for water solutions. Or just take the opportunity to secure growth plays at a more palatable price. You can start your wish list with these 11 fundamentally sound growth stocks, each of which appear positioned for big things once the market gets on steadier legs: