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U.S. futures rise, Congress avoids government shutdown

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Investing.com — U.S. stock futures tick higher, pointing to an extension in gains posted in the prior session. Elsewhere, the U.S. Congress passes a bill providing short-term funding to the federal government, while department store chain Macy’s (NYSE:) reportedly plans to axe thousands of jobs and close some locations.

1. U.S. futures move higher

U.S. stock futures edged into the green on Friday.

By 05:16 ET (10:16 GMT), the contract had risen by 73 points or 0.2%, while had gained 18 points or 0.4% and had inched up by 114 points or 0.7%.

The major averages on Wall Street surged on Thursday, boosted in part by the largest one-day jump in shares of iPhone maker Apple (NASDAQ:) in eight months. TSMC’s U.S.-listed shares spiked as well after the chipmaker said soaring demand for artificial intelligence will power a more than 20% rise in 2024 revenue.

Strong U.S. labor market data also bolstered confidence that the world’s largest economy was on track for a so-called “soft landing” — a scenario in which inflation is cooled without sparking a downturn in activity. These hopes helped brighten sentiment, which had been dampened recently by waning expectations that the Federal Reserve will soon move to bring interest rates down from more than two-decade highs.

2. Existing home sales ahead

Markets will have the chance to sift through fresh housing market data on Friday that could provide a glimpse into the health of the U.S. consumer.

Existing home sales are expected to have risen by a seasonally adjusted 0.3% in December when compared to prior month, according to a Wall Street Journal survey of economists. Over the entire year, the measure is seen dipping to its lowest level since 2008.

Mortgage rates in the U.S. were elevated throughout much of 2023, persuading many buyers to shy away from purchasing residential properties. Meanwhile, the higher mortgage rates also convinced many current homeowners to stay put, denting the housing supply and limiting declines in home prices.

But mortgage rates, which touched a 23-year high in October, have showed signs of cooling. On Thursday, Freddie Mac reported that the average fixed-rate 30-year mortgage dropped to its lowest mark since last May this week.

“This is an encouraging development for the housing market and in particular first-time homebuyers who are sensitive to changes in housing affordability,” said Freddie Mac Chief Economist Sam Khater in a statement. “However, as purchase demand continues to thaw, it will put more pressure on already depleted inventory for sale.”

3. U.S. Congress passes short-term funding bill

Congressional lawmakers have given the go-ahead to a bill that will keep the federal government in business until March, although looming policy fights still remain over issues like the war in Ukraine and U.S. border security.

The U.S. Senate approved the measure in a 77-18 vote, while the House approved it 314-108. The bill now goes to President Joe Biden’s desk for signing.

A replay of recent short-term funding extensions, Thursday’s resolution will provide the funding necessary to operate several key departments until March 1 and the rest of the government until March 8. They were due to run out of cash on Jan. 19 and Feb. 2, respectively.

But leaders on Capitol Hill still face the task of securing funding for an almost $1.7 trillion U.S. spending deal forged earlier this month. The details have yet to be determined, with the Biden administration and Democrats potentially needing to agree to more funding to help curb immigration at the southern U.S. border in order to secure Republican backing for military aid to Ukraine.

4. Macy’s to slash jobs, close stores – reports

Macy’s is set to reduce headcount and shutter locations in a bid to cut costs and streamline its business, according to media reports.

The U.S. department chain will slash 2,350 roles — amounting to 3.5% of its workforce — and close five stores. Macy’s employed 94,570 full- and part-time employees and operated 722 store locations as of January 2023.

The Wall Street Journal, which was the first to report on the plans, said that Macy’s is aiming to further automate its supply chain and outsource some jobs. In a memo to employees cited by the WSJ, the company said the layoffs would happen on Jan. 26.

Macy’s is facing heavy pressure from activist investors, who have reportedly set their sights on a $5.8 billion buyout of the owner of Bloomingdale’s stores and Bluemercury beauty shops. The firm, which is also in the midst of a leadership change, has yet to respond publicly to the activists.

5. Crude on pace for weekly gains

Oil prices rose on Friday, putting them on course for a positive week that has been fueled by geopolitical tensions as well as disruptions in U.S. oil production from a winter storm.

By 05:17 ET, the futures traded 0.8% higher at $74.51 a barrel, while the contract climbed 0.7% to $79.64 per barrel. Both benchmarks are on course for weekly gains of between 1% and 2%.

Cold weather has shut-in around 40% of oil output in North Dakota, a top oil-producing U.S. state, supporting the overall market, while tankers continued to be diverted away from the Red Sea due to violence in the region.

Also helping the market was data from the U.S. Energy Information Administration which showed a larger-than-expected draw in crude inventories of 2.5 million barrels, although gasoline and distillate inventories increased to multi-year highs.

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