U.S. stock-index futures rose modestly on Wednesday, suggesting major indexes could hit records again as news reports suggested Italy’s government could avoid a collision with the European Union over its budget, potentially averting a source of financial market turmoil.
Where are the major benchmarks trading?
Futures for the Dow Jones Industrial Average YMU9, +0.00% rose 58 points, or 0.2%, to 26,865. S&P-500 futures ESU9, -0.06% gained 7 points to 2,935.75, a rise of 0.2%. Nasdaq-100 futures NQU9, +0.17% gained 20 points to 7,672, a rise of 0.3%.
The Dow DJIA, +0.46% is coming off a record close, its 14th of the year, as well as its fourth straight daily gain. The S&P 500 SPX, -0.04% ended in slightly negative territory on Tuesday, while the Nasdaq COMP, -0.47% recorded a solid loss. At current levels, the Dow is less than 0.2% below its intraday record, and the move implied by futures suggested it could carve out a new all-time high on Wednesday. The S&P is 0.6% below its own record, while the Nasdaq is 1.6% under its intraday peak.
What’s driving markets?
Wall Street got an early lift on Wednesday after a report in Italian daily newspaper Corriere della Sera that the government may yield ground in a budget stalemate with the EU. According to the report, Italy’s budget deficit target will be set at 2.4% of GDP in 2019, but decline to 2.2% in 2020 and 2.0% in 2021. Italian officials had previously clashed with Brussels over the budget deficit target, which exceeded EU rules and stoked fears of another crisis in the region.
While U.S. stocks have mostly shrugged off political uncertainties from across the globe — in addition to Italy’s budget, investors have looked past the UK’s Brexit negotiations and the myriad issues surrounding U.S. trade policy with other major economies — a resolution of this issue would mean one less potential risk to watch out for.
Wednesday will be marked by comments from a number of officials from the Federal Reserve, including Chicago Fed President Charles Evans and Richmond Fed President Thomas Barkin before the market opens. In the afternoon, Cleveland Fed President Loretta Mester is scheduled to speak, as is Lael Brainard, a governor on the Fed’s board. Finally, Jerome Powell is scheduled to speak at 4 p.m. ET. On Tuesday, Powell, reiterated that he did not see signs that inflation could spike despite the low unemployment rate.
The comments came after the Fed last week raised rates for the third time this year and indicated it would do so again in December.
On the economic data front, the September report on private-sector employment from ADP will be released at 8:15 a.m. The report is the first of three readings on the labor market that will be released this week. Thursday will see the latest data on jobless claims, while Friday has the closely watched September jobs report.
Two reads on the services sector, from both the Institute from Supply Management and Markit, are also coming out on Thursday.
What are market analysts saying?
When it comes to Italy’s budget, “the issue is compliance with EU rules,” said Marshall Gittler, chief strategist at ACLS Global. “If Italy flouts EU rules, then the other countries are not likely to come to its rescue if and when it gets into financial trouble – as it has in the not-so-distant past. It’s the politics behind the move, not the economics. If Italy cooperates with the EU, then the EU is more likely to cooperate if necessary.”
What stocks are in focus?
Facebook Inc. FB, -1.91% photo-sharing social network Instagram suffered a world-wide outage Wednesday but has since resumed service for most users, a glitch that comes just days after it named a new head of the app.
Novartis AG NVS, +0.01% entered into a licensing and equity agreement with Boston Pharmaceuticals to develop three anti-infective drug candidates that are part of the Swiss company’s infectious diseases portfolio.
Vodafone Group PLC’s VOD, -1.49% Italian subsidiary has paid $2.77 billion for four licenses in Italy’s 5G-bandwidth auction, the country’s Ministry of Economic Development said late Tuesday.
Where are other markets trading?
Asian stocks traded near break-even levels, recovering from early losses. Major European indexes rose, supported by optimism over Italy.
Crude-oil prices CLK9, +0.03% rose 0.1% while gold GCM9, -0.02% was unchanged on the day. The U.S. Dollar Index DXY, +0.01% was slightly lower, with the euro also getting a bid from Italy.
Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.
