Here are five things you must know for Monday, September 27:
1. -- Stock Futures Edge Higher on Energy Rally, Bond Yields Extend Surge
U.S. equity futures moved higher Monday, with gains largely driven by oil and energy stocks, as investors look to navigate a potentially tricky week on Wall Street amid political risks, a looming global power crisis and a key debate on the nation's debt ceiling.
Oil prices jumped to the highest in three years in overnight trading Monday as a rolling power crisis in China, linked to tighter emissions standards and lack of coal, triggered factory shutdowns in the industrial northeast. In Europe, natural gas prices have risen 500% over the past year and in Britain, the vast majority of commercial gas stations have run dry amid panic-buying linked to a shortage of drivers and hauliers.
In the U.S., House Speaker Nancy Pelosi has set a Thursday date for a floor vote on the $1 trillion bipartisan infrastructure bill, which she had claimed would only happen if she had the numbers to pass it, while Senate lawmakers will grapple with legislation aimed at both avoiding a government shut-down and lifting the $28.4 trillion debt ceiling.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average are indicating an 87 point opening bell gain, while those linked to the S&P 500 are priced for a 2 point dip.
Nasdaq Composite futures are set for a 90 point decline, however, as higher Treasury bond yields, as well as additional pressures on semiconductor supplies linked to China's power crisis, holds back early Monday gains.
Benchmark 10-year Treasury note yields, meanwhile, traded at a 3-month high of 1.492% heading into the start of the session.
2. -- Pelosi Sets Thursday Infrastructure Vote; Senate Debates Debt Ceiling
House Speak Nancy Pelosi said Sunday that she is confident of winning a floor vote on the $1 trillion bipartisan infrastructure bill, now set for Thursday, even as Democrats remain divided on President Joe Biden's larger public spending plans.
“We’re going to pass the bill this week,” Pelosi told ABC’s 'This Week' program. “I’m never bringing a bill to the floor that doesn’t have the votes.”
Progressive Democrats, who largely support the infrastructure bill, want to use their leverage in negotiations within the larger $3.5 trillion budget resolution package before committing.
Pelsoi has said that total is very likely to be reduced once moderates and rival lawmakers conclude their ongoing talks, as leaders worry about the impact of tax increases and added debt on the optics of next year's Congressional elections.
3. -- Oil Prices Hit 3-Year Highs, Gas Prices Bumping Past $3.20 a Gallon
Global oil prices jumped to the highest levels in three years Monday, extending their rally to a fifth consecutive session, as the supply hit from Hurricane Ida continues to ripple through energy markets.
Goldman Sachs, in fact, boosted their year-end target price for crude to $80 a barrel over the weekend, citing a current supply/demand deficit that is "larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast."
The price boost has added upward pressure on domestic gasoline prices, as well, with the national average poised to test the highest levels of the year this week after closing out Friday at around $3.20 per gallon.
WTI futures for November delivery traded 95 cents higher from Friday's close to start the week at $74.93 per barrel. Brent contracts for the same month, the global pricing benchmark, were up $1.04 at $79.13 per barrel.
4. -- German Elections Fail To Deliver Clear Merkel Successor
Germany faces weeks, and possibly months, of tense negotiations among its political parties after weekend elections that failed to produce a clear winner to lead Europe's biggest and most important economy.
Germany's Social Democrats, a center-left party headed by Olaf Scholz, won 25.7% of the vote, topping the 24.1% gained by former Chancellor Angela Merkel's conservative CDU/CSU bloc. Scholz, 63, will now begin talks with Germany's Green Party, as well as the Liberals, in order to form a government that could hold more than 50% of the seats in the Bundestag, Germany's parliament.
Failing that, CDU/CSU leader Armin Laschet could then attempt to form a so-called 'Jamaica' coalition, a reference to the parties official colors of black, green and yellow, before the end of the year.
5. -- Wall Street Week Ahead
Wall Street faces a collection of headline risks over the final week of September, with stocks down around 1.5% amid the historically challenging month for equity markets, as investors enter the home stretch of an exceptional trading year.
Federal Reserve Chairman Jerome Powell, as well as Treasury Secretary Janet Yellen, will face Congressional lawmakers Tuesday to take questions on the economic aspect of the government's COVID 19 response, with investors likely focused on comments related to both the looming debt ceiling and the Fed's tapering path.
Micron Technology MU will publish earnings for its fiscal fourth quarter after the bell Tuesday, with analysts looking for a bottom line of $2.33 per share on revenues of $8.224 billion.
Pending home sales data for August will be published on Wednesday, with a final estimate of second quarter GDP released alongside weekly jobless claims at 8:30 am Eastern time Thursday. September's ISM manufacturing index will be released on Friday.