Here are the most important news, trends and analysis that investors need to start their trading day:
- Wall Street set to start week lower as oil hits 7-year highs
- Oil jumps to over $82 per barrel as global energy crisis persists
- Major banks' earnings lead third-quarter reporting this week
- Yellen warns on debt ceiling as House gets set to vote on deal
- Southwest cancels about 2,150 flights, blaming weather and staffing
U.S. stock futures fell Monday. Energy names surged as U.S. oil prices hit seven-year highs to start the new week. Dow stock Merck was nearly flat in Monday's premarket after the drugmaker said it applied for emergency use authorization in the U.S. for its antiviral Covid pill.
- The Dow Jones Industrial Average, the S&P 500 and the Nasdaq all finished higher last week, despite breaking a three-day winning streak Friday.
- A huge miss on September employment growth was largely overshadowed by optimism about a short-term debt ceiling deal.
- The Dow was about 2.5% away from its Aug. 16 record close. The S&P 500 was 3.2% from its Sept. 2 record close. The Nasdaq was almost 5.2% away from its Sept. 7 record close.
- There was no U.S. bond trading Monday due to the Columbus Day holiday.
U.S. oil prices, measured by West Texas Intermediate crude, surged 3.5% on Monday to more than $82 per barrel after rising nearly 4.6% last week. Gasoline prices at the pump were also at seven-year highs, around $3.27 per gallon, according to AAA. Crude prices extended multiweek gains as an energy crisis gripping major global economies showed no sign of easing. The energy crunch has been due to a pickup in business activity and restrained supplies from international producers. However, U.S. drillers were taking advantage of the increases, adding five new oil rigs last week, the fifth straight weekly increase.
This week, major banks kick off their third-quarter earnings. JPMorgan Chase, Goldman Sachs, Bank of America, Morgan Stanley, Wells Fargo and Citigroup are scheduled to report results beginning Wednesday. Analysts estimate an earnings growth rate of 27.6% for the S&P 500 for the third quarter, which would be the third-highest growth rate since 2010. Reports from Delta Air Lines and Dow stock Walgreens Boots Alliance are also on deck.
Treasury Secretary Janet Yellen said Sunday there's an "enormous amount at stake" after the Senate approved only a short-term extension of the debt ceiling, again setting up the potential for default in December if lawmakers are unable to make another deal. "A failure to raise the debt ceiling would probably cause a recession," Yellen reiterated on the ABC program "This Week." The House, which had been scheduled to be out this week, is set to return Tuesday to pass the measure. Senate GOP leader Mitch McConnell sent a warning Friday to President Joe Biden, saying Republicans "will not provide such assistance again."
Southwest Airlines canceled more than 1,800 flights this weekend, disrupting the travel plans of thousands of customers and stranding flight crews. The carrier blamed the meltdown on a combination of bad weather as well as shortages in air traffic controllers and its own staff. Other airlines canceled relatively few flights. Southwest, which did not comment on the disparity, has canceled 349 flights, 9% of its schedule, on Monday, according FlightAware. On Saturday, union officials said Southwest's decision this week to join its rivals in requiring Covid vaccines for workers is contributing to distractions for aviators.