Stocks rebound as Gang of Six deal gains support

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The plan would reduce the deficit by $3.7 trillion, and won the renewed support of Gang member Sen. Tom Coburn (R-Okla.), who had abandoned the group's talks in May. Senators from both parties offered strong support for the package after being presented with it Tuesday morning.

The day's stock gains mark a stark turnaround from Monday's trading, when stocks sank as it appeared major talks to rein in the deficit and raise the debt limit had stalled. Financial markets had largely shrugged off the debt-limit drama that has occupied Capitol Hill for months, but Monday's downturn came as the window to strike a deal before Aug. 2 grew smaller. The Treasury Department has warned that it will no longer have sufficient funds to meet all its obligations after that date without additional borrowing capacity.

The downturn in trading came on the same day that FitchRatings warned it would lower the U.S.'s AAA credit rating to B-plus by Aug. 4 if no deal is reached, coming on the heels of similar warnings from two other major credit ratings agencies.