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Stock market today: Dow rallies 400 points on debt ceiling deal optimism -- U.S. stocks surged on Wednesday amid optimism on the debt ceiling negotiations as retailers continue to report first-quarter earnings.

At 16:01 ET, the Dow Jones Industrial Average closed up 409 points or 1.2%, while the S&P 500 was up 1.2% and the NASDAQ Composite was up 1.3%.

The debt ceiling talks in Washington continue after top-ranking lawmakers met with President Joe Biden at the White House on Tuesday. The sides are trying to hammer out differences as the deadline for when the U.S. risks a default quickly approaches. After yesterday’s meeting, lawmakers expressed optimism a default would be averted.

Biden travels to Japan today for the weekend meeting of G-7 world leaders, but he is cutting the rest of a trip to Asia short while the debt ceiling issue persists. In remarks this morning, he said: “We’re going to come together, because there’s no alternative to do the right thing for the country.”

Target Corporation (NYSE:TGT) kicked off earnings from major retailers, reporting numbers that beat first-quarter forecasts but offering a second-quarter profit outlook that disappointed. Consumers are putting off some discretionary purchases while inflation forces them to spend more money on household necessities. Target shares closed up 2.6%.

TJX Companies Inc (NYSE:TJX), the parent of T.J. Maxx, fell short of revenue estimates for first-quarter earnings. Shares closed up 0.9%

Western Alliance Bancorporation (NYSE:WAL) shares rose 10% and led other regional banks higher after it gave another update on deposits, which continued to rise in May after the banking industry turmoil rocked the sector in March and April. Shares were up, while shares of other regional banks such as PacWest Bancorp (NASDAQ:PACW) and Zions Bancorporation (NASDAQ:ZION) rose 21.7% and 12%, respectively.

Tesla Inc (NASDAQ:TSLA) shares rose 4.4% after yesterday’s annual shareholder meeting, where CEO Elon Musk said he intends to remain in that role at the electric vehicle maker. The company will start deliveries of its highly anticipated Cybertruck later this year.

In economic data, April housing starts of 1.4 million annualized were about even with expectations but numbers for March were revised lower. Initial jobless claims for the previous week are due out Thursday morning.

Earnings expected on Thursday include reports from Walmart (NYSE:WMT), Alibaba (NYSE:BABA) and Bath & Body Works.

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