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Wall Street looked to rebound after a grim week amid cautious optimism lawmakers will be able to stave off a prolonged budget battle. Traders also awaited data on the housing market.
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As of 8:10 a.m. ET, Dow Jones Industrial Average futures climbed 62 points to 12632, S&P 500 futures gained 8.3 points to 1368 and Nasdaq 100 futures rose 17.8 points to 2551.
The markets took a beating last week, with the Dow tumbling 1.8% in its fourth-straight weekly retreat. Headlines concerning the looming U.S. fiscal cliff have been garnering much attention in recent weeks.
On Friday, President Barack Obama met with lawmakers on both sides of the aisle. The conversations were constructive, according to statements by the White House and House of Representatives Speaker John Boehner, the leading Republican in Congress. Over the weekend, the president held calls with a wide range of business leaders, including J.P. Morgan Chase's (NYSE:JPM) Jamie Dimon and Apple's (NASDAQ:AAPL) Tim Cook.
"The late-day rally in the U.S. on Friday on hopes that Republicans and Democrats may reach a compromise ahead of the fiscal cliff has carried market sentiment," analysts at Nomura wrote in a note to clients.
The fiscal cliff, which is a painful dose of automatic spending cuts and tax hikes that go into effect at the beginning of next year, represents a significant risk to the economy, according to many economists. However, a sharply divided Congress has put the passage of measures to avert the cliff in jeopardy.
On the economic front, traders will get fresh data on the U.S. housing market on the day. Economists expecting sales of existing, single-family homes to have held steady at an annualized rate of 4.75 million in October from September. The housing market that was pounded during the financial crisis has been showing fresh signs of life in recent months, although economists warn the rebound seen of late comes from very depressed levels.
The conflict between Israel and Palestine continued heating up over the weekend, with both sides repeatedly striking each other. The growing specter of war in the Middle East has put upward pressure on energy markets that tend to be particularly vulnerable to geopolitical uncertainty. The benchmark oil contract traded in New York climbed $1.03, or 1.2%, to $87.95 a barrel. Wholesale New York Harbor gasoline rose 0.42% to $2.722 a gallon.
Gold advanced by $9.20, or 0.54%, to $1,724 a troy ounce.
In corporate news, Lowe's (NYSE:LOW) posted better-than-expected results on the top and bottom lines. HSBC (NYSE:HBC) said it was in discussions to sell its stake in Ping An Insurance, China's No. 2 life insurer. According to news reports, the deal could bring in $9.3 billion.
Cisco (NASDAQ:CSCO) unveiled plans to scoop up cloud networking startup Meraki for $1.2 billion in cash.
The Euro Stoxx 50 rallied 1.4% to 2461, the English FTSE 100 jumped 1.2% to 5672 and the German DAX zipped higher by 1.5% to 7055.
In Asia, the Japanese Nikkei 225 advanced 1.4% to 9153 and the Chinese Hang Seng edged up by 0.49% to 21262.