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U.S. Market Gains Momentum with Dow Futures Up by 120 Points

As U.S. stocks start the week on a positive note amid progress in debt ceiling negotiations, concerns over economic stability and market volatility persist, impacting everything from Dow Futures to crude prices and gold futures.

Wall Street sign
Wall Street sign

U.S. stocks are set to start positively this Monday, driven by hopeful signs of advancement in raising the nation's debt ceiling. However, this optimism is somewhat tempered due to lingering worries about the overall economic condition. As of 06:50 ET (10:50 GMT), Dow Futures rose by 120 points, marking a 0.4% increase, while S&P 500 Futures and Nasdaq 100 Futures also experienced a hike, with gains of 0.4% and 0.3%, respectively.

Anticipation Builds for Debt Ceiling Resolution Amid Political Negotiations

This week is expected to see resumed talks between the two major political factions regarding a potential increase in the nation's debt ceiling. President Joe Biden's positive remarks over the weekend bolstered the prospects of a successful resolution. Emphasizing his inherent optimism, President Biden expressed his belief in both parties' shared interest in reaching an agreement.

Equity Market Instability Expected Amid Debt Ceiling Discussions

The ongoing debate surrounding the urgent need to raise the borrowing limit to prevent a national default could spur significant fluctuations in equity markets, warns Morgan Stanley analyst Michael Wilson. Although most clients anticipate an eventual resolution, Wilson predicts near-term volatility as an inevitable part of this process.

Economic Concerns Linger Despite Market Optimism

Despite the current positive market sentiment, the Dow Jones Industrial Average and the S&P 500 faced consecutive weekly losses last week. This downward trend was primarily triggered by apprehensions that the Federal Reserve's aggressive tightening cycle, spanning over a year, could plunge the economy into recession. With persistently high inflation, the Fed might have to persist with its interest rate hikes, as Fed Governor Michelle Bowman indicated.

Key Economic Indicators and Federal Reserve Commentary on the Horizon

The NY Fed manufacturing survey for May is the main economic release planned for Monday. The week will also witness the unveiling of retail sales, housing data, and weekly jobless claims. Fed Chair Jerome Powell will partake in a panel discussion on monetary policy in Washington alongside other key Fed officials, including John Williams, Loretta Mester, and Neel Kashkari.

Corporate Updates: Newmont in Focus Following $18bn Takeover Offer

In corporate news, Newmont is expected to be the center of attention after Australia's Newcrest Mining endorsed the U.S. gold miner's estimated $18 billion takeover bid.

Crude Prices Ascend Amid Dollar Weakness, Despite Economic Concerns

Crude prices saw a slight increase on Monday, propelled by the weaker dollar, despite persisting concerns over economic frailty in the world's top two oil-consuming nations, the U.S. and China. U.S. crude futures were 0.3% higher at $70.28 a barrel, while Brent edged up 0.2% to $74.34 per barrel. However, both benchmarks suffered their fourth consecutive week of decline due to fears of an uneven reopening in China and a potential recession in the U.S.

Gold Futures and EUR/USD Show Incremental Rise

In other financial news, gold futures were up by 0.1% to $2,021.15 per ounce, and EUR/USD saw a 0.3% rise, trading at 1.0875.