U.S. Stocks May See Further Upside On Optimism About Debt Limit Deal

After turning higher over the course of the previous session, stocks are likely to see further upside in early trading on Thursday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 334 points.

The markets may continue to react positively to news of Senate Minority Leader Mitch McConnell’s, R-Ken., offer to allow a temporary extension of the debt limit.

Senate Majority Leader Chuck Schumer, D-N.Y., said early this morning that an agreement had not yet been reached but said the two sides were “making good progress.”

“We’re not there yet, but I hope we can come to an agreement tomorrow morning,” Schumer said from the Senate floor.

The ongoing negotiations come as lawmakers are facing an October 18th deadline to raise the debt limit and avoid a potential default.

Early buying interest may also be generated in reaction to a report from the Labor Department showing a bigger than expected pullback in first-time claims for U.S. unemployment benefits in the week ended October 2nd.

The report said initial jobless claims fell to 326,000, a decrease of 38,000 from the previous week’s revised level of 364,000.

Economists had expected jobless claims to dip to 348,000 from the 362,000 originally reported for the previous week.

The bigger than expected decrease came after jobless claims rose for three straight weeks, reaching their highest level since early August.

The release of the weekly jobless claims report comes a day ahead of the release of the Labor Department’s more closely watched monthly jobs report on Friday.

After coming under pressure early in the session, stocks showed a significant turnaround over the course of the trading day on Wednesday. The major averages all climbed well off their lows of the session and into positive territory.

The Dow plunged by more than 450 points in early trading but ended the day up 102.32 points or 0.3 percent at 34,416.99. The Nasdaq also climbed 68.08 points or 0.5 percent to 14,501.91, while the S&P 500 rose 17.83 points or 0.4 percent to 4,363.55.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index advanced by 0.5 percent, while Hong Kong’s Hang Seng Index spiked by 3.1 percent.

The major European markets have also moved to the upside. While the French CAC 40 Index has surged up by 1.6 percent, the German DAX Index is up by 1.4 percent and the U.K.’s FTSE 100 Index is up by 1.2 percent.

In commodities trading, crude oil futures are falling $0.38 to $77.05 a barrel after tumbling $1.50 to $77.43 a barrel on Wednesday. Meanwhile, after inching up $0.90 to $1,761.80 an ounce in the previous session, gold futures are sliding $6.50 to $1,755.30 an ounce.

On the currency front, the U.S. dollar is trading at 111.42 yen versus the 111.41 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1557 compared to yesterday’s $1.1556.

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