Dow May Open Higher On Debt Deal Hopes

LONDON — Stock index futures at 7am ET indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI) may open up 0.88% this morning, while the S&P 500 (SNPINDEX: ^GSPC) may open up 1.0%, as hopes rise that a short-term deal to increase the debt ceiling may be agreed this week, after both Democrats and Republicans indicated their support for the idea. CNN’s Fear & Greed Index remains in the extreme fear zone, and is expected to open at 22 this morning, after closing at 20 yesterday.

European stock markets made strong gains this morning, as hopes rose that US politicians would reach a deal to avoid the risk of a possible US debt default. Investors were also encouraged by the nomination of Fed Vice Chair Janet Yellen to be the next chair of the Federal Reserve — Yellen is expected to maintain the Fed’s strongly dovish policy stance. The Bank of England’s Monetary Policy Committee (MPC) met this morning and voted to leave its interest rate and asset-purchase policies unchanged, at 0.5% and £375bn, respectively. At 7am ET, the FTSE 100 was up 1.14%, the DAX was up 1.43%, and the CAC 40 was up 1.65%.

In the US, today’s initial jobless claims report is expected to be published on time at 8.30am ET, despite the government shutdown. Analysts expect the report to show that 312,000 new claims for unemployment insurance were made last week, up slightly from 308,000 during the previous week. Today’s other main economic report — the import price index for September — is expected to be delayed, as is October’s Federal budget announcement, which was due at 2pm.

On the corporate front, Marriott Vacations Worldwide and Blackhawk Network Holdings are both expected to report their latest quarterly earnings before the open, while Safeway is scheduled to report its third-quarter earnings after tonight’s closing bell. Analysts’ consensus forecasts indicate earnings of $0.16 per share for the supermarket chain. Other stocks that may be actively traded today include Citrix Systems, which fell 13% in after-hours trading last night, after the firm cut its third-quarter guidance, saying that it expects earnings of between $0.67 and $0.68 per share for the quarter, below its previous guidance of $0.72 to $0.73 per share. 

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.