NASDAQ 100, Dow Jones, S&P 500: Futures Traders Showing Mixed Reaction to Bipartisan Bill Passage

Highlights

• Mixed stock futures as U.S. debt ceiling bill progresses.
• Bipartisan bill passes House, heads to Senate before default deadline.
• Market resilience amid tech rally; focus shifts to Fed meeting and economic indicators.

Overview

Stock futures are trading mixed on Thursday morning following the progress of the debt ceiling bill in the U.S. House. The House has sent the bill to the Senate for further consideration, as it represents an important measure to prevent a U.S. default. The deadline for the default is approaching rapidly, and this development is crucial in determining the outcome.

At 07:59 GMT, blue chip Dow Jones Industrial Average futures are trading 32977.00, down 2.00 or -0.01%. The benchmark S&P 500 Index futures are at 4196.50, up 6.00 or 0.14% and the tech-weighted Nasdaq futures are trading 14306.00, up 5.50 or +0.04%.

House Passes Bipartisan Bill, Averting Potential U.S. Default

The House of Representatives passed a bill to increase the debt limit and control government spending. The bill, with bipartisan support, is now being sent to the Senate just days before the deadline for a potential U.S. default. This marks the end of intense negotiations between the White House and Republican House Speaker Kevin McCarthy.

The Senate aims to pass the bill within 48 hours. President Joe Biden expressed satisfaction with the outcome and urged the Senate to act swiftly. McCarthy celebrated the passage of the bill but faced criticism from some Republicans who opposed it.

The bill passing with more Democratic votes than Republican votes surprised many. Failure to raise the borrowing limit could have severe consequences such as financial market instability, job losses, and the risk of losing government benefits.

The Fiscal Responsibility Act resulted from a deal between McCarthy and Biden, providing conservatives with policy victories in exchange for their support in raising the debt ceiling beyond the next presidential election. Most importantly, if Congress does not pass it, the bill prevents a potential U.S. debt default next week.

AI Stocks Fuel Nasdaq Surge in May

In May, the stock market witnessed a notable rally in artificial intelligence-related stocks, leading to a 5.8% gain in the Nasdaq Composite. Chipmaker Nvidia experienced a significant jump of 36%, reaching a temporary market cap of $1 trillion. Tech giants Alphabet, Meta, and Amazon also saw substantial increases, each rising by at least 10% during the month.

However, outside of the tech sector, gains were limited. The S&P 500 edged up by only 0.3%, while the Dow Jones Industrial Average declined by nearly 3.5%. Nike, Walt Disney, and Chevron weighed down the blue-chip index.

Markets Eye Federal Reserve Meeting

Amidst the market’s resilience and ability to absorb negative sentiment and headlines, investors are now shifting their focus to upcoming events. One notable event is the Federal Reserve’s policy meeting scheduled for June 13-14, which has the potential to impact the market. Philadelphia Fed President Patrick Harker expressed his inclination to skip a rate hike at the meeting, but mentioned that the upcoming payrolls report could influence his decision.

Nordstrom Surges, Salesforce Slips

In extended trading, Nordstrom experienced a 7% jump after surpassing Wall Street’s expectations for fiscal first-quarter sales. Conversely, Salesforce shares are lower by around 6% despite raising its full-year forecast, as its reported capital expenses were higher than anticipated.

Economic Indicators Awaited: ADP, Jobless Claims, PMI

Several Economic Indicators to Release on Thursday: ADP Non-Farm Employment Report, Weekly Jobless Claims, and Purchasing Managers’ Index.