Today: Stocks skyrocket as debt deal seems in sights, but reminder of effects of federal government's shutdown arrives in Silicon Valley.

The Lead: Wall Street pops on hopes for debt deal, but SGI shows shutdown's effects

Wall Street experienced some of its strongest one-day gains of the year Thursday as politicians seemed headed toward a deal that would avoid a default on the United States' debt, but the ongoing government shutdown claimed its first victim in Silicon Valley after the markets closed.

All three major U.S. stock indexes jumped more than 2 percent Thursday as a break seemed to occur in the political standoff on Capitol Hill: Republicans signaled that they would be willing to temporarily boost the debt ceiling in order to avoid a U.S. default that could cause economic calamity, and President Barack Obama said he would consider signing such a bill.

"I would hope the president would look at this as an opportunity and a good-faith effort on our part to move halfway, " Speaker of the House John Boehner, R-Ohio, told reporters Thursday.

The other half of the standoff is beginning to have consequences, however, as the federal government remains shuttered with no end in sight as Republicans and Democrats battle over the budget. Fremont high-tech firm SGI announced after the end of trading Thursday that it would not meet its projected revenue target because its government clients aren't able to pay their bills or sign up for new service.

"Although we began Q1 expecting ongoing budget uncertainty in the federal space similar to what we experienced through the fiscal cliff and the sequester, we could not have anticipated the unprecedented halt in all transaction activity that occurred in late September due to the looming government shutdown," SGI CEO Jorge Titinger said in Thursday's news release.

SGI said that it expects to report quarterly revenue of $147 million after earlier forecasting sales of $160 million to $170 million, and losses are expected to grow to a maximum of 21 cents a share from earlier forecasts that capped net losses at 14 cents a share, partly because funds for a project were frozen at the federal level.

Titinger added that the shutdown will continue to cause financial uncertainty because "it is virtually impossible to transact business with most of our federal customers at this time."

After joining in Thursday's gains with a 2 percent advance to $16.35, SGI stock plummeted in after-hours transactions to near $14, a decline of more than 14 percent.

The Fremont company -- which focuses on high-performance workstations, enterprise storage and big data services -- might not be the last local company to show short-term financial strain from the shutdown, as many Silicon Valley giants count on federal contracts for revenues, including San Jose networking giant Cisco (CSCO). With earnings season beginning, investors will be looking for signs of weakness from companies exposed to the shutdown, especially in their forecasts for the all-important final quarter of 2013.

"Earnings uncertainty is a reason to be cautious in the near term. We're going to be watching very closely the companies that come out with guidance," Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York, told Reuters.

SV150 market report: Netflix and Facebook rebound, HP turns around

Silicon Valley stocks joined in Thursday's reversal on Wall Street, with the SV150 also gaining more than 2 percent and former high fliers like Netflix (NFLX) and Facebook recovering from big losses earlier in the week.

Facebook moved 4.9 percent higher to $49.05 even as the Menlo Park social network announced the end of a privacy safeguard that most of its members were not using. Netflix jumped 5.4 percent to $303.99 after Needham initiated coverage of the Los Gatos company's stock with a "Buy" rating and $425 price target. Other local tech companies that had experienced sharp rises earlier in the year and sharp falls this week joined in: Tesla Motors (TSLA) gained 2.5 percent to $172.93, Yelp moved 4.4 percent higher to $66.25 and Pandora Media increased 3.9 percent to $24.70.

Foster City's Gilead Sciences (GILD) gained 6.5 percent to $62.74 after announcing that a study on a needed cancer drug was cut off after early results showed the product to be highly effective. Apple (AAPL) gained 0.6 percent to $489.64, Google (GOOG) increased 1.5 percent to $868.24, Oracle (ORCL) moved 2.5 percent higher to $32.99 and Intel (INTC) gained 2.3 percent to $23.10.

One of the few Silicon Valley stocks to suffer a declined Thursday was Hewlett-Packard (HPQ), as the Palo Alto tech giant regressed 1.2 percent to $22.32 after a large gain Wednesday. Some analysts issued notes Thursday morning basically saying "Show me, don't tell me," after CEO Meg Whitman laid out a rosier forecast than expected at HP's analyst meeting Wednesday. "Sustainable improvements in the model over the next year will be required for investors to give HP more credit for its plans of crisper strategy and execution," J.P. Morgan analyst Mark Moskowitz wrote.

Up: Gilead, Workday, Netflix, Facebook, EA, Yelp, Pandora, AMD, Adobe (ADBE), SunPower (SPWRA), Salesforce, SolarCity, Applied Materials, Yahoo (YHOO), LinkedIn, Oracle, Tesla, Cisco, Intel, eBay

Down: Ubiquiti, HP, Palo Alto Networks, Brocade

The SV150 index of Silicon Valley's largest tech companies: Up 26.70, or 2.05 percent, to 1,331.72

The tech-heavy Nasdaq composite index: Up 82.97, or 2.26 percent, to 3,760.75

The blue chip Dow Jones industrial average: Up 323.09, or 2.18 percent, to 15,126.07

And the widely watched Standard & Poor's 500 index: Up 36.16, or 2.18 percent, to 1,692.56

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.