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Stock Futures Rise After Debt-Limit Extension Proposal

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Stock Futures Rise After Debt-Limit Extension Proposal

U.S. stock futures rose after Republicans offered a short-term debt-limit extension, helping stave off immediate concerns about a possible government default.

Futures for the S&P 500 gained 0.9% Thursday, indicating that the broad market index will rise after a choppy week of trading. Contracts for the tech-focused Nasdaq-100 rose 1.1% and futures for the Dow Jones Industrial Average added 0.8%.

Concerns over whether the Treasury would be able to raise money to pay its bills have weighed on investors this week, alongside soaring energy prices and a general shift higher in government bond yields. The Republican proposal would extend the debt ceiling into December, provided that Democrats affix a dollar amount to the debt level. Treasury Secretary Janet Yellen has warned that her department is likely to exhaust its cash-conservation measures by Oct. 18 if Congress doesn’t act.

“Right now, there are loads of fears out there. It just takes a couple of positive developments and suddenly that picture changes. Last night, we had positive news on the debt ceiling,” said Lewis Grant, an equities portfolio manager at Federated Hermes.

Shares of Twitter rose 2.2% in premarket trading. Twitter said Wednesday it would sell mobile ad firm MoPub to AppLovin for $1.05 billion in cash.

In bond markets, the yield on the benchmark 10-year Treasury note crept up to 1.538% Thursday from 1.524% Wednesday. Yields and prices move inversely. 

Futures for Brent crude, the benchmark in international energy markets, edged 0.4% lower to $80.75 a barrel. Futures for gas to be delivered in the Netherlands—the European benchmark—fell 5.2% to 102.99 euros, equivalent to about $119.04, a megawatt-hour in volatile trading. This came after Russian President Vladimir Putin said Wednesday that Moscow was ready to work on stabilizing the global energy market, causing a sudden reversal in natural gas prices, which had earlier soared to their highest level on record.

Meantime, the pan-continental Stoxx Europe 600 index jumped 1.3%, with gains led by the basic resources and auto sectors.

As the federal debt and budget deficits grow in Washington, it’s unclear whether Democrats and Republicans are concerned. WSJ’s Gerald F. Seib examines where each party stands on the issue. Photo illustration: Todd Johnson

Indexes in Asia also closed higher. Hong Kong’s Hang Seng climbed 3.1%, led by gains in technology companies. Shares of Chinese Estates (Holdings) rose 32% in Hong Kong on Thursday after its majority shareholders offered to take the company private. The group is a major shareholder of embattled property giant China Evergrande Group.

South Korea’s Kospi rallied 1.8%. The Nikkei 225 added 0.5%.

Fresh figures showed that 326,000 Americans applied for first-time unemployment benefits in the week ended Oct. 2, down from 364,000 the week prior.

Concerns over whether the Treasury will be able to raise money have weighed on investors.

Photo: brendan mcdermid/Reuters

Write to Caitlin Ostroff at [email protected]

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Source: WSJ


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