Futures edge higher on debt talks optimism

[May 15, 2023]  By Shreyashi Sanyal and Shristi Achar A

(Reuters) - U.S. stock index futures edged higher on Monday on optimism over a likely deal to raise the U.S. debt limit as a deadline edged closer, while investors awaited comments from Federal Reserve policymakers through the week.

President Joe Biden said over the weekend he expects to meet with congressional leaders on Tuesday and remained optimistic about agreeing on a deal to raise the nation's $31.4 trillion borrowing limit.

The months-long standoff in Washington has added to global economic worries, as a new non-partisan congressional report cited "significant risk" of a historic default within the first two weeks of June.

"There is some hope forming around the Hill at the start of the week that real progress may finally be made in reaching an agreement on the U.S. debt ceiling," said Clifford Bennett, chief economist at ACY Securities.

At 6:52 a.m. ET, Dow e-minis were up 125 points, or 0.37%, S&P 500 e-minis were up 16 points, or 0.39%, and Nasdaq 100 e-minis were up 38 points, or 0.28%.

Investors will also be tracking speeches by a host of Federal Reserve officials this week at various forums, including Chair Jerome Powell on Friday at the Thomas Laubach Research Conference.

Chicago Fed President Austan Goolsbee, Minneapolis Fed President Neel Kashkari and Fed Board Governor Lisa Cook are among multiple Fed officials set to speak later in the day.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 11, 2023. REUTERS/Brendan McDermid

Their comments will be closely watched to gauge exactly how early markets can start pricing in rate cuts this year.

Retail sales, housing data and a reading on weekly jobless claims will also be watched through the week, after data on Friday showed that consumer sentiment slumped to a six-month low in May, and U.S. long-term inflation expectations jumped to the highest since 2011.

The Dow Jones Industrial Average fell 1.1% last week, while the S&P 500 index fell 0.3% and the Nasdaq rose 0.4%.

Among early movers, ONEOK Inc fell 4.3% in premarket trading as it agreed on Sunday to buy U.S. pipeline operator Magellan Midstream Partners in a cash-and-stock deal valued at about $18.8 billion including debt. Shares of Magellan rose 14.6%.

U.S.-listed shares of Chinese companies bounced, with Alibaba Group Holding, Baidu Inc and JD.com Inc up between 1.9% and 2.9%, on hopes of more stimulus measures.

Shares of Google-parent Alphabet Inc fell 1% on a report that Loop Capital downgraded its stock to "hold" from "buy", while shares of Meta Platforms Inc rose 1.2% after the brokerage upgraded to "buy" from "hold".

(Reporting by Shreyashi Sanyal and Shristi Achar A in Bengaluru; Editing by Nivedita Bhattacharjee)

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