U.S. stock futures rose on Monday amid building optimism that the government debt ceiling deadline can be resolved.
How are stock-index futures trading
- S&P 500 futures ES00, +0.29% added 12 points, or 0.3%, to 4150
- Dow Jones Industrial Average futures YM00, +0.28% rose 91 points, or 0.3%, to 33446
- Nasdaq 100 futures NQ00, +0.18% climbed 36 points, or 0.3%, to 13432
On Friday, the Dow Jones Industrial Average DJIA, -0.03% fell 9 points, or 0.03%, to 33301, the S&P 500 SPX, -0.16% declined 7 points, or 0.16%, to 4124, and the Nasdaq Composite COMP, -0.35% dropped 44 points, or 0.35%, to 12285.
What’s driving markets
Traders are starting the week on a positive note as hope build that the U.S. debt ceiling deadline can be resolved.
Despite a generally well-received earnings season and signs easing inflation can allow the Federal Reserve to halt its monetary tightening cycle, stocks have been unable to break out of their recent range as first banking sector anxiety and lately worries about a technical government debt default have restrained bulls.
But news over the weekend that talks between the White House and congressional leaders had been “constructive” and a second round of discussions is set for Tuesday boosted optimism that a solution can be reached.
“There has been some short covering on U.S. futures and oil markets after U.S. President Biden hinted that progress is being made on debt ceiling negotiations..” said Stephen Innes, managing partner at SPI Asset Management.
However, Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, warned against complacency given previous debt-ceiling deadlines have required significant market volatility to encourage politicians to reach agreement.
“[W]e’ve continued to remind investors that since 2011, getting Congress to strike a deal has seemed to occur only after the stock market has thrown a temper tantrum,” said Calvasina in a note to clients.
“In years where the drama in equity markets has otherwise been modest, the hits generally end up in the 5-6% area. In years in which debt ceiling drama has occurred in the context of other major problems in the market (i.e., 2011, 2015-2016, 2018), the hits have ranged from 10% to 19%,” she added.
Investors will also be looking to a slew of updates on the health of the U.S. consumer in coming days. These include retail sales data for April and results from Home Depot HD, +0.97% to be published on Tuesday, and Walmart’s WMT, -0.03% earnings on Thursday.
U.S. economic updates set for release on Monday include the Empire State manufacturing survey, due at 8:30 a.m. Eastern.
There will also be some Fedspeak, with Chicago Fed President Austan Goolsbee on TV at 8:30 a.m. and Minneapolis Fed President Neel Kashkari making comments at 9:15 a.m.