Gilead Sciences reportedly set to buy Kite Pharma
U.S. stock futures came off session lows and turned slightly higher before trading opened Monday, with oil stocks set to be in focus as investors try to gauge the extent of damage at energy facilities after then-Hurricane Harvey slammed into Texas.
After trading in the red, futures for the Dow Jones Industrial Average turned up 3 points to 21,812.00, and S&P 500 futures reversed course to rise 1.75 points, or 0.1%, to 2,444.50. Nasdaq-100 futures tacked on 2.75 points, or 0.1%, at 5,827.75.
The devastation of now-Tropical Storm Harvey will be front of investors' minds as trading begins Monday. Houston, the fourth-largest city in the U.S., is grappling with unprecedented flooding and officials reportedly responded to more than 1,000 calls for rescue. The National Weather Service warned that rainfall may exceed a record-breaking 50 inches in areas around Houston. (http://www.marketwatch.com/story/houston-forecast-unprecedented-50-inches-of-rain-2017-08-27)
The storm, which was moving toward Louisiana early Monday, knocked out almost 15% of the nation's fuel-making capacity and further disruptions were anticipated. The coast of Texas hosts nearly 30% of U.S. refining capacity, and Houston-area plants account for roughly half of that.
Read:Houston flooding expected to cause bumpy ride for energy markets (http://www.marketwatch.com/story/houston-flooding-expected-to-have-quite-awful-impact-on-energy-markets-2017-08-27)
That led to U.S. gasoline futures jumping nearly 6% early Monday. September Nymex futures recently traded 5% higher at $1.750 per gallon, and the more active October contract climbed nearly 4%.
Shares of energy companies are set to be active on Monday. Exxon Mobil Corp. (XOM) shut its Baytown refinery -- the second largest in the U.S. -- in a Houston suburb because of the heavy floodwaters, and Royal Dutch Shell PLC (RDSB.LN) said it stopped making fuel at its Deer Park, Texas, plant.
"Although the full impact of the storm's damage is yet to be determined, the markets expect the impact will be felt globally and affect energy markets for many weeks," analysts at FxPro said Monday. "Following Hurricane Katrina in 2005, U.S. economic growth dropped by 50% in a quarter, therefore markets will be closely watching the damage from Harvey and its effect on the U.S. economy."
Read:Insurance industry to easily absorb losses from Harvey, experts say (http://www.marketwatch.com/story/insurance-industry-to-easily-absorb-losses-from-harvey-experts-say-2017-08-27)
The SPDR Energy Select Sector exchange-traded fund (XLE) should also be active as investors watch for more developments about the country's energy infrastructure. That ETF on Friday rose 0.4%, a fourth-consecutive advance.
The dollar also holds the potential of driving the direction of Wall Street Monday, with the ICE Dollar down 0.3% to 92.47, then recovering somewhat, as the greenback lost ground against the yen, the euro and pound.
U.S. stocks on Friday closed mixed (http://www.marketwatch.com/story/us-stock-futures-climb-as-market-gears-up-for-yellens-jackson-hole-speech-2017-08-25) after neither Federal Reserve Chairwoman Janet Yellen nor European Central Bank President Mario Draghi offered clues about future monetary policy. The Dow Jones Industrial Average ended up 0.1% and the S&P 500 index rose 0.2%, but the Nasdaq Composite Index shed 0.1%.
Still, all three benchmarks finished last week with gains.
Economic data: The Commerce Department's report on advanced trade in goods in July is due at 8:30 a.m. Eastern. The advanced trade gap is expected to widen to a seasonally adjusted $64.6 billion, according to economists polled by MarketWatch.
The Dallas Fed survey of manufacturing activity will be released at 10:30 a.m. Eastern.
See: MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
Corporates: Gilead Sciences Inc. shares (GILD) rose 3% ahead of the bell following a Wall Street Journal report that the company will buy Kite Pharma Inc (http://www.marketwatch.com/story/gilead-to-buy-kite-pharma-for-about-11-bln-wsj-2017-08-28).(KITE) for about $11 billion. Kite shares rose 16% in low premarket volume.
Aveo Pharmaceuticals Inc. (AVEO) rallied 20% premarket after the company's Fotivda, or tivozanib, treatment for advanced renal cell carcinoma has been approved in the European Union.
Other markets: Elsewhere in the energy markets, West Texas Intermediate oil futures fell about 1% to $47.42 a barrel, and October Brent crude darted between gains and losses.
Gold prices were up 0.5% at $1304 an ounce.
In Asia, Hong Kong's Hang Seng Index edged up 0.1% while the Japan's Nikkei Average ended fractionally lower. European equities (http://www.marketwatch.com/story/european-stocks-under-pressure-as-euro-hits-highest-since-january-2015-2017-08-28) fell as the euro hit its highest against the dollar in more than two years.
Trading in the U.K. was closed for the August bank holiday.
(END) Dow Jones Newswires
August 28, 2017 07:55 ET (11:55 GMT)