Stock futures trade mixed as traders eye DC votes

On Sep 27, 2021

Stock futures traded mixed Monday morning as investors closely monitored developments in Washington, D.C., as lawmakers rush to try and avert a government shutdown and advance a bevy of new measures.

Contracts on the S&P 500 were little changed to slightly lower, after the blue-chip index posted a three-day winning streak at the end of last week. Nasdaq futures lagged with a drop of 0.5% as Treasury yields climbed. The benchmark 10-year yield extended gains to top 1.48%, reaching its highest level since June as optimism over the economic recovery mounted. Dow futures added about 0.2%.

Investors are kicking off trading this week following a volatile streak of trading, with the potential default of key Chinese property developer Evergrande and concerns over monetary and fiscal policy front and center. At its lowest closing level last week, the S&P 500 had pulled back just over 4% from its Sept. 2 record closing high. The index, however, has since recouped most of those gains, and traded about 1.8% below its all-time closing high by the end of Friday’s session.

This week, investors will be watching developments on the fiscal front especially closely. Lawmakers are racing to vote in the coming days on legislation to fund the government beyond the end of the fiscal year on Thursday and prevent a government shutdown. This will come against a backdrop of ongoing debates around a bipartisan $1 trillion infrastructure deal and $3.5 trillion budget reconciliation package.

And elsewhere, Federal Reserve Chair Jerome Powell is set to testify with Treasury Secretary Janet Yellen before the Senate Banking Committee on Tuesday, and the House Financial Services Committee on Thursday, on the Fed and Treasury’s responses to the coronavirus pandemic.

House Speaker Nancy Pelosi said Sunday the chamber would vote Thursday on the bipartisan infrastructure deal, which the Senate passed last month. That would come the same day that lawmakers need to come to an agreement to fund the government to avert a partial shutdown, which would take effect on Friday at 12:01 a.m. ET without congressional action.

The Senate is set to hold a vote Monday on a measure that would extend government funding through early December while also raising the debt limit until the end of next year. This measure, however, is expected to be blocked by Republican lawmakers, who have balked at tying the extension of government funding to raising the debt limit.

“Speaker Pelosi and Senate Schumer announced that they will move forward with legislation that ties an extension of government spending authority to a suspension of the debt limit. Our political economist believes that the likelihood of a government shutdown increases the longer Democrats pursue this course,” David Kostin, Goldman Sachs chief U.S. equity strategist, wrote in a note Monday morning. “However, we find no major consistent reaction of the S&P 500 to government shutdowns since 1980.”

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7:39 a.m. ET Monday:…