Published October 16, 2013
FOX Business: Capitalism Lives Here
U.S. stock-index futures rebounded from a selloff in the prior session as traders bet lawmakers will make a deal to raise the debt ceiling before the October 17 deadline.
As of 8:00 a.m. ET, Dow Jones Industrial Average futures climbed 58 points to 15153, S&P 500 futures advanced 6.3 points to 1698 and Nasdaq 100 futures climbed 7.5 points to 3248.
It's all about politics.
As has become a daily ritual on Capitol Hill, several plans emerged Tuesday to stave off a potential American default ahead of the October 17 deadline imposed by the Treasury Department. However, those plans all fell through amid deep partisan divides between the Democratic-controlled Senate and the Republican-powered House. Late in the day, however, Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell struck an agreement that might be able to clear both houses.
Analysts at Nomura told clients late Tuesday "it is not entirely clear what happens next, but there is a clear path to a resolution" despite recent "roadblocks."
Still, lawmakers' inability to pass legislation began reverberating through credit markets Tuesday. Fitch put the U.S. 'AAA' credit rating on watch for a downgrade and the U.S. government saw tepid demand at a bond auction.
"It can only be assumed that U.S. traders don’t realize that the light at the end of the tunnel is actually a train," Alastair McCaig, a market analyst at IG in London said.
Meanwhile, in corporate news, Bank of America (BAC), the second-biggest U.S. bank by assets, posted better-than-expected quarterly earnings. PepsiCo (PEP) also revealed results that beat Wall Street's expectations.
Apple (AAPL) was said to cut orders for its low-end 5c iPhone, according to multiple news reports.
In commodities, U.S. crude oil futures fell 32 cents, or 0.32%, to $100.90 a barrel. Wholesale New York Harbor gasoline was flat at $2.66 a gallon. Gold advanced $7.20, or 0.57%, to $1,281 a troy ounce.