Dow Futures Edge Higher Ahead Of Debt Talks And Bank Earnings

LONDON — Stock index futures at 7am ET indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI) may open up 0.13% this morning, while the S&P 500 (SNPINDEX: ^GSPC) may open up by one point, as investors reserve judgement on a debt ceiling deal, following yesterday’s 2.2% market surge. CNN’s Fear & Greed Index has risen into the fear zone, and is expected to open at 35 this morning, after closing at 22 yesterday.

European markets edged cautiously higher in trading this morning, as investors continued to hope that a solution would be found to the US debt crisis. Talks between the Obama administration and Republicans are expected to continue today, with a deal possible before the end of the week. In London, shares in the UK’s postal service, Royal Mail, rose by 32% on their opening day of trading, triggering heavy volumes as investors cashed in their gains, spurring criticism that the government set the initial offering price for the shares too low. At 7am ET, the FTSE 100 was up 0.76%, the DAX was up 0.39%, and the CAC 40 was up 0.03%.

After yesterday’s jobless claims report showed an unexpected increase to 374,000, investors will be left in the dark today, as all of the day’s major economic reports — which cover retail sales and producer price inflation — are expected to be delayed by the government shutdown. The only report expected on-schedule today is October’s University of Michigan Consumer Sentiment Index, which is due at 9.55am and is expected to have fallen to 75.0, from 77.5 in September.

Things may get more interesting on the corporate front, as both J.P. Morgan and Wells Fargo are expected to report their third-quarter earnings before the opening bell. Analysts’ consensus forecasts suggest that J.P. Morgan may report earnings of $1.19 per share, while Wells Fargo is expected to post earnings of $0.97 per share. Analysts are broadly bullish on both banks, and J.P. Morgan was up by 0.5% in pre-market trading this morning.

Other stocks that may be actively traded today include Safeway, which was up by 7.7% in pre-market trading this morning and could surge when markets open, after the firm said that it would exit the Chicago market, where it operates 72 Dominick’s stores, resulting in a cash tax benefit of $400m – $450m.

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.