Dow Set to Rise, Debt Ceiling and Energy Crunch Fears Ease—and What Else Is Happening in the Stock Market Today

Investors welcomed positive signs that Congress would resolve the looming debt ceiling.

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The stock market was rising Thursday, building on momentum from late gains on Wall Street Wednesday, as investor fears surrounding the U.S. debt ceiling and a global energy crunch eased.

Futures for the Dow Jones Industrial Average indicated an open 130 points higher, after the index climbed 102 points Wednesday to close at 34,416. Futures for the S&P 500 and Nasdaq indicated a similar open.

Overseas, Hong Kong’s Hang Seng rose 3.2% and the pan-European Stoxx 600 was 1% higher.

Investor concerns have calmed slightly following a week of volatility where markets stressed over familiar issues such as inflation, central bank stimulus, supply-chain pressures, U.S. political friction, and an energy crunch.

In particular, progress in resolving the looming U.S. debt ceiling deadline—and avoiding a federal default—as well as Russia’s offer of help to alleviate a European power crisis boosted stocks Thursday.

“Risk sentiment improved following reports that Senate Minority Leader Mitch McConnell was willing to negotiate with Democrats to resolve the debt ceiling impasse and allow Democrats to raise the ceiling until December,” said Jim Reid, a strategist at Deutsche Bank.

Russian President Vladimir Putin’s offer of help to “stabilize” the natural-gas market in Europe—where prices have surged around 500% this year—has calmed worries of an energy crisis in the region and helped cool commodity prices. European natural-gas prices eased 10% Wednesday, coal fell 10%, and futures contracts for oil have moved down around 1% Thursday.

Now, the market is looking forward to the U.S. jobs report Friday, which measures nonfarm payrolls, as the next major update on central bank stimulus. The Federal Reserve has indicated that it will closely watch employment indicators, as it considers slowing its program of monthly asset purchases, which adds liquidity to markets.

“Despite the market chasing its tail and tying itself up in knots each day this week, thanks in part to a slow data calendar, all roads lead to tomorrow’s U.S. nonfarm payrolls,” said Jeffrey Halley, an analyst at broker Oanda. 

“The underlying factor making markets nervous is the trajectory of Federal Reserve monetary policy. In this case, will the Fed taper start in December, or get pushed back into 2022 along with the dot plot,” Halley said. “Tomorrow’s U.S. nonfarm payroll data should go a long way to answering that question, with a print north of 500,000 jobs added locking and loading the taper.”

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