Stocks rose on Wednesday as investors were encouraged by signs congressional leaders and President Joe Biden could reach a deal on the U.S. debt ceiling before its June default deadline.

Here's how the market settled on Wednesday:

S&P 500 Index (SPY  ): +1.19% or +48.87 points to 4,158.77

Dow Jones Industrial Average (DIA  ): +1.24% or +408.63 points to 33,420.77

Nasdaq Composite Index (QQQ  ): +1.28% or +157.51 points to 12,500.57

Biden and congressional leaders including House Speaker Kevin McCarthy met again on Tuesday, with McCarthy stating after the discussions that "it is possible to get a deal by the end of the week." The White House said the president has canceled part of an upcoming international trip to continue the negotiations.

Analysts on JPMorgan's U.S. Market Intelligence Team weighed in that while McCarthy said the deal is possible this week, "the timeline may be by the end of next week ahead of Memorial Day," adding that any breakthrough in talks could potentially impact markets.

"With that in mind, equities may trade in a tight range until an outcome is observed with the biggest downside risk coming if we enter Memorial Day weekend without a solution, given the early June X-date," the analysts wrote in a Wednesday note.

U.S. Treasury Secretary Janet Yellen and others have warned of potential catastrophic impacts on the U.S. economy if Congress does not take action ahead of a default. The Dow is down more than 1.6% this month as market participants grow concerned of the looming June deadline.

Elsewhere on Wednesday, Target (TGT  ) topped Wall Street's earnings expectations for the first quarter, even as revenue rose only 1% year-over-year as shoppers pulled back on discretionary spending.

"The consumer is under pressure," Chief Growth Officer Christina Hennington said on the call with reporters. "The consistent inflation, the running out of savings as well as just economic uncertainty in general is having an impact on their choices and they're making trade-offs."

On the economic front, U.S. housing starts grew 2.2% in April to an annualized rate of 1.4 million units, according to government data out Wednesday. Single-family starts also increased by 1.6% month-to-month to their highest level in 2023 so far. Still, on an annual basis, overall starts fell 22.3%. Meanwhile, building permits fell 1.5% to an annualized rate of 1.41 million units in April, representing a 21.1% year-over-year decline.

In single-stock news, Tesla (TSLA  ) shares rose after the electric vehicle maker encouraged investors at its annual shareholder meeting late Tuesday. CEO Elon Musk said that the company plans to deliver its first Cybertrucks later this year and that Tesla is well-positioned for the long run even as he expects an economic downturn in the near-term.

Looking ahead, investors will turn their attention to earnings from retailers Walmart (WMT  ) and Alibaba (BABA  ) as well as more housing market data.