Stock-futures pointed to a bounce for U.S. equities early Tuesday, after talks toward a new round of fiscal stimulus between the Trump administration and House Democrats made some progress.
But gains were pared after The Wall Street Journal reported that the Justice Department was prepared to file a long anticipated antitrust lawsuit Tuesday against Google, a unit of Alphabet Inc. GOOG, -2.44% GOOGL, -2.40%, putting big tech companies in the regulatory spotlight.
What are major benchmarks doing?
Futures on the Dow Jones Industrial Average YM00, +0.42% were up 95 points, or 0.3%, at 28,195, after rising more than 200 points in earlier activity. S&P 500 futures ES00, +0.44% traded 12.55 points higher, up 0.4%, at 3,435.25, while Nasdaq-100 futures NQ00, +0.29% advanced 31 points, or 0.3%, to 11,681.25.
The Dow DJIA on Monday lost 410.89 points lower, or 1.4%, to close at 28,195.42, after trading as high as 28,711.93. The S&P 500 SPX finished 56.89 points lower, or 1.6%, at 3,426.92, after briefly rising above the 3,500 level. The Nasdaq Composite COMP ended at 11,478.88 after falling 192.67 points, or 1.7%.
What’s driving the market?
House Speaker Nancy Pelosi, D-California, and U.S. Treasury Secretary Steve Mnuchin are set to talk further Tuesday, which Pelosi has said is a deadline for a deal in principle to enable lawmakers to pass a plan ahead of the Nov. 3 presidential election.
Stocks had tumbled Monday as hopes for a pre-election fiscal stimulus deal faded, but Pelosi ‘s office late Monday said talks were continuing to narrow differences. While Trump has increased his offer for an aid package to $1.8 trillion Senate Republicans are still seen resisting a large spending package.
Negotiations over another fiscal stimulus negotiations have weighed on investor sentiment for months after the main provisions from the CARES Act expired at the end of July. House Democrats have passed two additional relief bills that were rejected by the Republican-controlled Senate. The latest from House Democrats was worth $2.2 trillion, while the counteroffers from the White House have edged up to $1.8 trillion.
“The prospects for an actual deal still remain minuscule as the Republicans in the Senate vehemently oppose the size of the stimulus discussed, but hope runs eternal in the markets and investors continue to remain optimistic that if some sort of deal is reached between the White House and the House of Representatives then the momentum and pressure from Trump will force the Senate to cave and approve the package,” said Boris Schlossberg, managing director for FX at BK Asset Management, in a note.
Stock-futures were also supported by news that Moderna’s MRNA, -4.03% CEO told The Wall Street Journal that the company’s coronavirus vaccine could be available for emergency use in December if it gets positive results from its interim trial in November.
Investors, meanwhile, were sifting through a deluge of corporate earnings reports this week, with dozens of S&P 500 index companies and several Dow components due to release third-quarter results this week.
Also on the U.S. calendar, Randal Quarles, the Federal Reserve’s vice chair for financial stability, was scheduled to speak at the SIFMA annual meeting at 10:50 a.m. Eastern time, while Chicago Fed President Charles Evans is slated to deliver a speech on the outlook to the Detroit Economic Club at 1 p.m. Atlanta Fed President Raphael Bostic is due to take part in a panel discussion on housing at the Penn Institute for Urban Research at 5 p.m.
Housing starts in September rose by nearly 2% to a 1.42 million annual pace, while building permits rose 5.2% to a 1.55 million pace. Economists surveyed by MarketWatch, on average, expect starts to come in at a 1.45 million annual pace, while permits are seen at a 1.518 million pace.
Which companies are in focus?
- Alphabet Inc. shares were off 0.3% in premarket action.
- Shares of International Business Machines Corp. IBM, -0.32% were down 3.5% in premarket trade after the computing giant late Monday reported that third-quarter revenue fell.
- Travelers Cos. Inc. TRV shares were up 2.8% ahead of the bell after the Dow component reported earnings and revenues that topped Wall Street forecasts.
- Shares of Philip Morris International Inc. PM rose 0.6% premarket after beating forecasts for earnings and revenue and raising its 2020 outlook.
- Procter & Gamble Co. PG shares were up 1.6% in premarket trade after reporting a rise in fiscal first quarter earnings and boosting its guidance.
- Shares of Goldman Sachs Group Inc. GS, -0.25% were up 0.4% in premarket trade after Bloomberg reported Monday that the bank agreed to a more-than-$2 billion settlement with the U.S. Justice Department for its role in Malaysia’s 1MDB scandal.
How are other markets trading?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.787% rose 1.7 basis points to 0.778%.
In global equities, the Shanghai Composite SHCOMP, +0.46% rose 0.5%, while Hong Kong’s Hang Seng Index HSI, +0.11% gained 0.1% and Japan’s Nikkei 225 Index NIK, -0.44% advanced 0.4%. The pan-European Stoxx 600 Europe SXXP, -0.18% was off 0.2%, while London’s FTSE 100 UKX, +0.28% was up 0.1%.
Oil futures flipped between small gains and losses, with the U.S. benchmark CL00, -0.56% off 0.3% at $40.93 a barrel. Gold futures GOLD, -1.99% were off 0.4% at $1,904.60 an ounce.
The ICE U.S. Dollar Index DXY, -0.21%, a measure of the currency against a basket of six major rivals, was down 0.2%.
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