Wall Street pointed modestly higher before the opening bell Thursday on hopes U.S. political leaders can reach an agreement to avoid a potentially disastrous default on government debt.
Futures for the benchmark S&P 500 index rose 0.2% and the Dow Jones Industrial Average rose less than 0.1%.
Wall Street rallied Wednesday after President Joe Biden expressed confidence “America will not default” despite lack of agreement on Republican demands for cuts in aid to poor families in exchange for raising the amount the government can borrow.
“Markets are now fully pricing an in-time resolution of the crisis,” said Clifford Bennett of ACY Securities in a report. “No one wants to sell ahead of an announcement of a deal being made."
Speaker Kevin McCarthy of the House of Representatives said Tuesday the two sides were far apart but could reach a deal by the end of the week. The U.S. government will run out of cash if they don't agree by June 1 to increase its borrowing limit.
Any disruption in U.S. government borrowing and debt payments could send shockwaves through the global financial system. Treasury debt is regarded as the world's safest asset and influences the price of private sector borrowing.
In Washington, legislators and the White House are arguing over Republican demands for cuts, curbs on spending growth or work requirements for programs that help poor families pay for food, rent and medical care. The Republican plan also would block Biden's proposal to forgive some student debts and would repeal tax credits to promote use of clean energy and combat climate change.
A recession, at least a brief slow down, was widely anticipated this year following interest rate hikes to rein in stubbornly high inflation by slowing business activity.
However, major U.S. corporations have largely topped most financial performance expectations, but modestly in an environment of higher rates and a cooling economy.
Walmart rose about 1.5% before the bell after the nation's biggest retailer topped Wall Street's sales and profit forecasts. Arkansas-based Walmart also raised its full-year outlook, a notable sign of optimism during a time of heightened anxiety for consumers and and investors.
Video game maker TakeTwo Interactive jumped 13% to about $141 per share in off-hours trading after it forecast a huge jump in revenue for fiscal 2025, stoking speculation that Grand Theft Auto VI is on the way.
Investors also worry about the health of global banks following three high-profile failures in the United States and one in Switzerland. Banks have been squeezed by the unexpectedly fast run-up in interest rates, which caused the market prices of bonds on their books to fall.
In Europe at midday, the FTSE in London rose 0.7%, the DAX in Frankfurt gained 1.5% and the CAC 40 in Paris advanced 0.9%.
In Asia, the Shanghai Composite Index gained 0.4% to 3,297.31 and the Nikkei 225 in Tokyo advanced 1.6% to 30,573.93. The Hang Seng in Hong Kong rose 0.9% to 19,727.25.
The Kospi in Seoul was 0.8% higher at 2,515.40 and Sydney’s S&P-ASX 200 added 0.5% to 7,236.80.
India’s Sensex was up less than 0.1% at 61,57.39. New Zealand and Southeast Asian markets also rose.
In energy markets, benchmark U.S. crude lost 14 cents to $72.69 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.97 on Wednesday to $72.83. Brent crude, the price basis for international oil trading, declined 13 cents to $76.83 per barrel in London. It gained $2.05 the previous session to $76.96.
The dollar advanced to 137.80 yen from Wednesday's 137.61 yen. The euro declined to $1.0818 from $1.0838.
On Wednesday, the S&P 500 and the Dow both rose 1.2%. The Nasdaq composite gained 1.3%.
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McDonald reported from Beijing; Ott reported from Silver Spring, Md.
