U.S. Stocks May See Early Strength Following Agreement To Avoid Government ShutdownOctober 8, 2021
Following the mixed performance seen in the previous session, stocks are likely to move mostly higher in early trading on Thursday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 124 points.
Easing concerns about a potential U.S. government shutdown may generate early buying interest after Senate Majority Leader Chuck Schumer, D-N.Y., announced an agreement on a stopgap spending bill.
The proposed legislation, which would fund the government through December 3rd, also includes spending on hurricane relief and Afghan refugee resettlement.
Schumer said the Senate would vote on the legislation later today, although the bill would still need to pass the House before a midnight deadline.
Even if a government shutdown is avoided, the U.S. still faces a potential default amid an impasse over raising the debt ceiling.
Treasury Secretary Janet Yellen has warned of “catastrophic economic consequences” if the debt ceiling is not raised by October 18th.
The futures remained positive even after the Labor Department released a report showing initial jobless claims unexpectedly increased for the third straight week in the week ended September 25th.
The report said initial jobless claims edged up to 362,000, an increase of 11,000 from the previous week’s unrevised level of 351,000. The uptick surprised economists, who had expected jobless claims to dip to 335,000.
With the unexpected increase, jobless claims climbed further off the pandemic-era low of 312,000 set in the week ended September 4th.
Meanwhile, a separate report from the Commerce Department showed economic growth in the U.S. accelerated by slightly more than previously estimated in the second quarter.
The Commerce Department said real gross domestic product shot up by 6.7 percent in the second quarter compared to the previously reported 6.6 percent spike. Economists had expected the jump in GDP to be unrevised.
Just after the start of trading, MNI Indicators is due to release its report on Chicago-area business activity in the month of September.
The Chicago business barometer is expected to edge down to 65.0 in September from 66.8 in August, although a reading above 50 would indicate continued growth.
After ending Tuesday’s trading sharply lower, stocks fluctuated over the course of the trading session on Wednesday. The major averages eventually ended the session mixed, with the tech-heavy Nasdaq edging down to a new two-month closing low.
The Dow and the S&P 500 came under pressure going into the close but held on to modest gains. While the Nasdaq dipped 34.24 points or 0.2 percent to 14,512.44, the Dow rose 90.73 points or 0.3 percent to 34,390.72 and the S&P 500 inched up 6.83 points or 0.2 percent to 4,359.46.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index fell by 0.3 percent, while China’s Shanghai Composite Index advanced by 0.9 percent.
The major European markets have also turned mixed on the day. While the U.K.’s FTSE 100 Index is up by 0.2 percent, the French CAC 40 Index is just below the unchanged line and the German DAX Index is down by 0.2 percent.
In commodities trading, crude oil futures are slumping $1 to $73.83 a barrel after falling $0.46 to $74.83 a barrel on Wednesday. Meanwhile, after sliding $14.60 to $1,722.90 an ounce in the previous session, gold futures are climbing $9.40 to $1,732.30 an ounce.
On the currency front, the U.S. dollar is trading at 111.88 yen versus the 111.96 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1587 compared to yesterday’s $1.1598.
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