Traders on the NYSE floor, August 23, 2023.
Source: NYSE
Stock futures rose on Monday after U.S. lawmakers managed to reach a temporary agreement that prevented a government shutdown.
Futures tied to the Dow Jones Industrial Average rose 76 points, or 0.2%. S&P 500 futures gained 0.3%, while Nasdaq 100 futures gained 0.6%.
The Senate passed a continuing resolution just hours before the midnight Saturday deadline, which was then signed into law by President Joe Biden. The bill keeps the government open for an additional 45 days, a longer period that lawmakers can use to finalize funding legislation.
“Investors don’t like being constantly pushed to the edge of the cliff,” said Jamie Cox, managing partner at Harris Financial. Since there is “no shutdown, we should see a very positive reaction in the markets.”
Gains in futures were limited as investors feared lawmakers would ultimately head for another shutdown battle as Saturday’s agreement did nothing to spark disagreements over overall levels of government spending, the border and Ukraine.
“Markets will start to price this as a 2024 event rather than a 2023 event,” Cox said. “They’re just going to continue to do everything they can to push this into an election year.”
The looming threat of a government shutdown weighed on investors last week, which also marked the end of the trading month and quarter. Investors feared a shutdown could further weigh on the U.S. economy, whose growth is already slowing under the weight of the highest interest rates in 15 years.
September marked the worst monthly performance of the year for the S&P 500 and the Nasdaq Composite. The broad S&P 500 index ended the month down 4.9% and the quarter down 3.7%, while the tech-heavy Nasdaq Composite lost 5.8% for the month and 4.1% for the quarter. The blue-chip Dow ended the month down 3.5% and the quarter down 2.6%.
But despite the decline, the indices are still up year-on-year, underscoring the strength of the rally in the first half of the year. The S&P 500 is down about 6% from its 2023 closing high in July, but is still up 11% for the year.
Investors will be paying attention to economic data on purchasing and construction spending coming out on Monday. Later in the week, attention will turn to a series of reports offering insight into the health of the labor market, including all of the key monthly payroll data on Friday.