Dow Futures Gain As Investors Wait For Shutdown Solution

LONDON — Stock index futures at 7am ET indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI) may open up by 0.19% this morning, while the S&P 500 (SNPINDEX: ^GSPC) may open 0.26% higher. Market sentiment may be helped by House Speaker John Boehner’s comments that he would not allow a default, and would force through an increase to the debt ceiling if needed before the October 17 deadline. However, CNN’s Fear & Greed Index remains in the fear zone, and is expected to open at 28 this morning, after closing at 35 yesterday.

European markets moved higher this morning, as investors shrugged off the risk of a US default, although most markets are expected to close below this week’s opening levels. In London, Barclays failed to rise despite a broker upgrade and news that 95% of shares offered in its £6bn rights issue had been accepted, but fellow financial Standard Life topped the leaderboard, and was up by 2.3% at 7am ET, when the FTSE 100 was up 0.14%, the DAX was up 0.05%, and the CAC 40 was up 0.54%.

Today’s nonfarm payroll reports have been delayed by the government shutdown, depriving investors around the world of their normal monthly guidance on US employment growth and the unemployment rate — two key elements of economic recovery and of the Fed’s tapering plan. A Bloomberg survey of economists suggests that the government shutdown could reduce GDP growth by 0.1% for each week of closure, as 800,000 federal employees remain temporarily out of work.

In company news, auto retailer Sonic Automotive is scheduled to report its latest quarterly earnings, and Facebook may be active after announcing that it will start displaying advertising on its popular Instagram image-sharing service. Facebook shares were up nearly 1.0% in pre-market trading this morning, while Forest Oil is likely to surge after gaining 12% in after-hours trading last night following news that it is to sell its Texas Panhandle oil and gas assets for $1.0bn. Sandwich chain Potbelly could start trading today, after raising its initial offering price to between $12 and $13 per share. Meanwhile, railroad operator Union Pacific was down 1.5% in after-hours trading and may fall when markets open, after the firm issued third-quarter guidance below analysts’ expectations.

Finally, let’s not forget the Dow's daily movements can add up to some serious long-term gains. Indeed, Warren Buffett recently wrote: "The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions."

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> Roland does not own shares in any of the companies mentioned in this article.