Futures in New York rose during Monday’s morning session, thereby building on Friday’s strong finish. European stocks also experienced modest gains.
Contracts on the Nasdaq 100 jumped 0.5%, while those on the S&P 500 climbed 0.4% higher. Futures on the Dow Jones Industrial Average edged higher by a little under 0.1%. In Europe, the Stoxx Europe 600 rose 0.1% during early trading in London.
Investors expressed cautious optimism by returning to some riskier assets after it was announced late Saturday that the White House had reached an agreement to raise the government’s debt ceiling, thereby averting a catastrophic default.
President Joe Biden and House Speaker Kevin McCarthy both expressed confidence that the agreed-upon legislation will be passed by Congress. The government will need to enact the proposed law by June 1, the self-imposed deadline when the government will run out of cash.
Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors claimed that this development allows investors to focus once again on market fundamentals when making investment decisions. “The obvious positive interpretation is that a negative tail risk is close to being taken off the table,” Suzuki commented.