Futures surged across the board Monday, after top U.S. lawmakers sealed a deal to raise the debt ceiling one day ahead of a deadline for a potential default.
Dow Jones futures were more than 100 points higher in early morning trading.
President Obama announced a compromise that would shrink the deficit by around $2.4 trillion in the next 10 years.
The Senate and the House of Representatives are due to vote on Monday and the bill could be signed by Obama in time to avoid a technical default by the US on August 2, when the Treasury runs out of funds.
The dollar enjoyed a relief rallyagainst the yen and the Swiss franc but some analysts said the move is likely to be short-lived as the deal struck by members of Congress does not necessarily remove the threat that the U.S. triple-A credit rating will be downgraded.
Oil climbed after the news of the deal, which some analysts said was the result of an improved demand outlook from the world's biggest economy.
Strategists have warned however that Wall Street's relief rally may be short-lived as the weakness of the US economy comes back to haunt investors.
"My expectation is we get a little bit of a bounce and then the market isn't able to sustain it," Barry Knapp, head of equities portfolio strategy at Barclays, said.
"I don't think that another round of GDP reductions is priced in," he added.
On the tech front, Apple gained after Piper Jaffray said the firm's survey points to a "significant pent up demand" for the next iPhone, particularly at Verizon .
Meanwhile, Yahoo gained even after Evercore partners cut its price target on the firm to $19 from $20.
In earnings news, HSBC gained after the banking giant beat earnings forecasts and hiked dividends. In addition, the firm announced it is cutting 30,000 jobs as part of its cost reduction program.
Humana jumped after the health insurer posted a 35 percent surge in profit, easily beating estimates, as more people enrolled in the firm's Medicare plans.
No major earnings are expected after-the-bell tonight, but Pfizer , Toyota and Barclays are scheduled to report Tuesday morning.
Peabody Energy and ArcelorMittal launched a hostile bidfor Macarthur Coal after the Australian company said their approach undervalued its resources of the key steelmaking ingredient and it was working on attracting a rival offer.
On the economic front, ISM manufacturing data for July comes out at 10:00 am ET and analysts surveyed by Briefing.com see it at 54, slightly lower than June's 55.
Construction spending data for June is also out at 10:00 am and Briefing.com analysts expect it to have stayed flat compared with May's 0.6 percent decline.
Coming Up This Week:
MONDAY: ISM Mfg Index, construction spending
TUESDAY: Personal income & spending, auto sales; Earnings from Pfizer, Toyota, Barclays, CBS
WEDNESDAY: Weekly mortgage apps, Challenger job-cut report, ADP employment report, factory orders, ISM non-mfg index, oil inventories; Earnings from Comcast, MasterCard
THURSDAY: Weekly jobless claims, money supply, chain-store sales; Earnings from GM, AIG, Kraft, Sunoco
FRIDAY: Employment situation, consumer credit; Earnings from P&G
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