Dow Jones futures gained sharply Wednesday night, as did S&P 500 and Nasdaq futures. The major markets climbed moderately Wednesday, rebounding from steep morning lows in response to McConnell’s debt-limit proposal. It was a good indicator for the stock market rally attempt, but it is still a market correction for the time being.
Senate Minority Leader Mitch McConnell stated on Wednesday that Republicans will allow Democrats to pass a short-term debt-limit extension, assisting in avoiding a potential default on Oct. 18. Democratic senators have indicated that they will accept the deal.
On Wednesday, Affirm Holdings (AFRM) soared yet again, this time on the back of a new “buy now, pay later” deal with Target (TGT). The AFRM stock surged, showing multiple buy signs and reaching its highest level since February.
Twitter (TWTR) agreed to sell its MoPub mobile ad network to AppLovin (APP) for $1.05 billion following the closure. TWTR stock climbed moderately in extended trading, attempting to break through its 200-day and 50-day moving averages. The stock of APP increased by 9.5 percent, indicating a robust advance past a handle purchase mark.
Software Stocks Advance
Fortinet (FTNT), Palo Alto Networks (PANW), Zscaler (ZS), Salesforce.com (CRM), Microsoft (MSFT), and Bill.com (BILL) are all performing well. Software companies are remarkably immune to the supply-chain problems that plague the rest of the economy.
Snowflake (SNOW), Fortinet (FTNT), Palo Alto Networks (PAL), and ZS stock have all recovered or recaptured their 50-day moving averages, while Bill.com has recovered from its 10-week line. CRM stock is on the verge of recovering a breakout buy mark after rallying off its 21-day moving average. In a stronger market, bold investors may profit from all of these names.
Meanwhile, Microsoft’s stock soared to the 50-day moving average. According to MarketSmith analysis, a flat-base buy point isn’t far above that important level.
Bitcoin’s price rocketed upward on Wednesday, reaching $55,000 intraday before falling slightly. Marathon Digital (MARA), Grayscale Bitcoin Trust (GBTC), and Coindesk (CNDSK) all saw gains in bitcoin and cryptocurrency-related stocks (COIN).
Meanwhile, energy stocks plummeted sharply as oil prices fell and natural gas prices decreased after both had reached all-time highs. Treasury rates reversed from multimonth highs to finish marginally lower, keeping financials stable.
The stock of Microsoft is on the IBD Leaderboard. IBD Long-Term Leaders include Fortinet stock and Microsoft.
McConnell Debt Limit Offer
Republicans, according to Senate Minority Leader Mitch McConnell, will allow Democrats to approve a two-month debt-limit extension through normal channels. This would reduce the likelihood of a government default. Treasury Secretary Janet Yellen has said that the deadline is Oct. 18, while other reports indicate that the Treasury may be able to prevent a disruptive default until early November.
McConnell’s offer came as Senate Majority Leader Chuck Schumer prepared to attempt again to push through a longer-term debt-limit increase, amid Republican opposition. Meanwhile, at a White House meeting, President Joe Biden asked some of the country’s top executives to raise the debt ceiling alarm.
Democrats have also been attempting to persuade moderate Senators to support a special exception from the filibuster for a debt limit increase, something McConnell is sure to have opposed.
Senator Chris Coons, D-Del., told CNN that “Mitch McConnell blinked” and that Democrats would likely accept McConnell’s offer to raise the debt ceiling until December. In practice, the Treasury might then resort to extraordinary measures once more, pushing the next effective debt default to February 2022 or slightly later.
Finally, Schumer and McConnell are playing chicken, attempting to pin or share blame for a government default — or debt-limit rise — on the opposition party.
The debt limit increase also complicated Democrat efforts to focus on a reconciliation deal, both legally and politically. The White House, congressional leaders, and progressives have backed down from calls for a $3.5 trillion spending bill.
They are attempting to persuade Senators Joe Manchin and Krysten Sinema to approve approximately $2 trillion in expenditures as well as large tax increases, but there is currently no agreement. Progressive, left-wing Democrats are stalling the passage of a $1 trillion infrastructure measure until considerable progress on the political reconciliation deal is made.
Dow Jones Futures Today
Dow Jones futures gained 0.5 percent compared to fair value. The S&P 500 futures rose 0.6 percent, while the Nasdaq 100 futures rose 0.8 percent.
Keep in mind that overnight trading in Dow futures and other markets does not always transfer into actual trade in the next regular stock market session.
Stock Market Rally Attempt
The stock market rally attempt faltered in the morning but rallied to close marginally higher, at session highs, as McConnell’s debt-limit rise offer alleviated default fears.
In stock market trading on Wednesday, the Dow Jones Industrial Average increased 0.3 percent. The S& P 500 index increased by 0.4 percent. The Nasdaq composite increased by 0.5 percent. The small-cap Russell 2000 fell 0.5 percent, but it finished near session highs.
Microsoft stock is a component of the Dow Jones, S& P 500, and Nasdaq composite indexes. CRM stock, which is traded on the NYSE, is included in the Dow Jones and S& P 500 indexes.