US stock futures higher early Thursday following market turnaround

U.S. equity futures were trading higher in a healthy turnaround after a morning marked by broad losses across sectors.

Investors in the U.S. are hoping Congress may manage to temporarily extend the federal government’s debt ceiling and buy lawmakers time to reach a more permanent resolution. The market recovered from a 460-point loss in the morning shortly after Senate Republican leader Mitch McConnell offered Democrats an emergency short-term extension to the federal debt ceiling into December.

Financial markets have mostly taken the debt-ceiling drama in stride, expecting yet another 11th hour solution, but some voices on Wall Street have warned investors recently to make preparations for a default, however unlikely, given how extremely damaging it would be for the economy and markets.

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“People were nervous about the debt ceiling,” said Jay Hatfield, CEO of Infrastructure Capital Advisors.

The S&P 500 rose 0.4%, to 4,363.55. Gains in technology stocks, makers of household goods and communication companies helped offset losses in energy and other sectors. About 57% of stocks in the index rose.

U.S. equity futures were trading higher in a healthy turnaround after a morning marked by broad losses across sectors. (Associated Press)

The Dow Jones Industrial Average rose 0.3% to 34,416.99. The Nasdaq gained 0.5%, to 14,501.91. The tech-heavy index had been down 1.2% before the afternoon rally.

Small-company stocks, a gauge of confidence in economic growth, fell: The Russell 2000 index gave up 0.6% to 2,215.

If the nation’s debt ceiling, which caps the amount of money the federal government can borrow, isn’t raised by Oct. 18, the country “would likely face a financial crisis and economic recession,” Treasury Secretary Janet Yellen told Congress last week.

During a meeting Wednesday with bank executives, President Biden stressed the importance of Congress raising the debt limit.

“We haven’t failed to do that since our inception as a country. We need to act. These leaders know the need to act.”

The Senate went into recess late Wednesday so lawmakers could discuss McConnell’s proposal, delaying a procedural vote on a House-passed bill to suspend the debt cap.

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The latest bout of market volatility comes as investors question the economy’s path forward, amid rising inflation and the ongoing impact from the virus pandemic. Bond yields have remained relatively stable since a sharp jump late last month that signaled concern that high inflation could linger longer than economists and investors had initially anticipated.

High on Wall Street’s list of concerns is the Federal Reserve’s timetable for raising interest rates. The Fed’s policymaking committee recently…