Wall Street Rally On Cards As Futures Surge 1% on Shutdown Breakthrough Hopes

Wall Street futures went up by 1% amid investor sentiment turning positive, as a key bipartisan agreement has been reached to end the over 40-day government shutdown in the United States.

The S&P 500 futures went up by nearly 1%, while Nasdaq 100 futures increased by 1.3%, indicating an extension of the market recovery seen on Friday.

Dow Jones Industrial Average futures also logged an uptick, rising 0.44%, indicating a strong open for the US equities.

The shutdown came into effect on Oct. 1, when Democrats in the Senate or Upper Chamber of the legislature refused to vote on and approve a new spending bill from the Trump administration.

This refusal stemmed from the Democrats' insistence on extending tax credits that would continue to make healthcare more affordable for US residents. This was also done to ensure that the administration does not make cuts to Medicaid, which is a healthcare service for Americans in the low income bracket.

The shutdown is likely to wound down due to eight moderate Democrats putting their support behind the Republican Party regarding the spending bill in exchange for a vote on the extension of the aforementioned tax credits for healthcare. This would not be a sure-shot guarantee for their extension which was the primary aim of the shutdown.

The Senate voted 60-40 on the bill that will fund the US government until Jan. 30, ending a shutdown that had gone for a record 40 days.

The impending likelihood of the government resuming all its services spurred an increased risk-taking sentiment from investors, according to reports. This development may help make up for the sell-offs in tech stocks.

The end of the shutdown would also lead to the resumption of the release of economic data. This would help the US Federal Reserve to have a more definite guidance on the magnitude and the right time for rate cuts.

The optimism regarding the US markets was infectious as it also affected European Stock futures, which increased by 1.5% and Asia-Pacific equities went up by 1%.

Analysts clarified the bill needs to be cleared by both houses of US Congress, before being approved by President Donald Trump, and any delays in this process may still affects US markets.