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U.S. benchmark stock indexes looked likely to reach record territory on Tuesday, with shares of Home Depot and Walmart partly helping to buoy the Dow after the giant retailers rang up better-than-expected quarterly results.
Investors were also weighing more tensions between China and the U.S. against a glimmer of progress in talks between Democrats and Republicans over another coronavirus fiscal aid package.
How are major stock indexes faring?
Futures for the Dow Jones Industrial Average YM00, +0.19% YMU20, +0.19% rose 41 points, or 0.2%, to trade at 27,818; those for the S&P 500 index ES00, +0.16% ESU20, +0.16% picked up 4.70 points, or 0.1%, at 3,384.50; Nasdaq-100 futures NQ00, +0.44% NQU20, +0.44% climbed 50.75 points to reach 11,337.50, a gain of 0.5%.
On Tuesday, the Dow Jones Industrial Average DJIA, -0.30% fell 86.11 points, or 0.3%, to end at 27,844.91, or 5.8% away from its record close. The S&P 500 index SPX, +0.27% rose 9.14 points, or 0.3%, closing at 3,381.99, only 0.1% away from its record closing peak at 3,386.15. The Nasdaq Composite Index COMP, +1.00% added 110.42 points, or 1%, finishing at 11,129.73, while booking its 33rd record close of the year.
What’s driving the market?
So far, Wall Street hasn’t found sufficient justification to push the S&P 500 index to a record since Feb, 19, but market participants on Tuesday were assessing quarterly results from the biggest retailers in the country that could add further fuel to bullishness that has cooled somewhat of late.
Shares of Walmart Inc. WMT, +2.26% and Home Depot Inc. HD, +2.74% surged toward record territory premarket Tuesday, after the retailers reported a fiscal second-quarter profit that were better than expected.
Many retailers have been leveled by business closures imposed due to the COVID-19 pandemic but Home Depot and Walmart have found some support from investors focusing on home-improvement projects and general shopping needs during the pandemic. Walmart sells about 25% of all groceries bought in the U.S. and its results have been boosted by its partnership with Instacart, an internet startup, for grocery deliveries.
Investors also gathered upbeat data on the housing market, which might also lend further optimism to the buying mood. U.S. home builders began construction on homes at a seasonally-adjusted annual rate of 1.496 million in July, up 22.6% from the previous month and 23.4% from a year ago, the U.S. Census Bureau reported Tuesday, underscoring a powerful turnaround for coronavirus stricken market.
Increases in both single-family and multifamily starts contributed to the increase. Permitting activity occurred at a seasonally-adjusted annual rate of 1.495 million, up 18.8% from June and 9.4% from July 2019.
Meanwhile, reports indicate that Senate Republicans plan to introduce a skinny coronavirus relief plan that also includes $10 billion for the U.S. Postal Service, which is at the heart a controversy over mail-in voting for the general elections on Nov. 3. It is unclear if the new proposal will help break an impasse between the two political parties after $600 a week in extra unemployment benefits expired at the end of July.
Senate Majority Leader Mitch McConnell’s comments that continuing discussions on fresh coronavirus aid may not lead to a deal, combined with media reports that the GOP proposal for a further reduction to aid may sap some market optimism, Deutsche Bank analysts said in a note.
The Republican proposal also includes a $300 a week enhanced unemployment benefit, money for small business aid, and protection for employers against lawsuits stemming from Covid-19 infections, according to Bloomberg.
Also on investors’ radar, the U.S. has imposed fresh restrictions on Huawei, after President Donald Trump again said the China technology group’s products are spyware.
Which stocks are in focus?
- Oracle Corp. ORCL, -0.38% has entered the picture as a potential buyer of TikTok, the Financial Times reported Monday night.
- Shares of Walmart Inc. WMT, +2.26% surged after it produced better-than-expected second-quarter results.
- Retailer Kohl’s KSS, +0.21% also reported results that were above consensus forecast but the company didn’t provide same-store sales results due to the coronavirus closures.
- Shares of Home Depot Inc. HD, +2.74% surged in premarket trading Tuesday, after the retailer reported a fiscal second-quarter profit that rose above expectations, as sales jumped 23.4% to a record to beat forecasts by a wide margin.
- Shares of Advance Auto Parts Inc. AAP, +1.47% were headed toward a 9-month high in premarket trading Tuesday, after the auto parts seller reported a fiscal second-quarter profit that was well above expectations, helped by the best same-store sales performance in nearly 10 years.
- Boeing Co. BA, -3.40% will offer its employees a second round of buyouts, the aviation giant said Monday. “While we have seen signs of recovery from the pandemic, our industry and our customers continue to face significant challenges,” Boeing said in a statement.
How are other markets trading?
In Asia on Monday, China’s CSI 300 index 000300, -0.05% closed less than 0.1% lower, while Hong Kong’s Hang Seng Index HSI, +0.07% advanced 0.1% and Japan’s Nikkei 225 NIK, -0.19% declined 0.2%.
In Europe, the Stoxx 600 Europe Index SXXP, +0.01% saw muted gains, up less than 0.1% in afternoon trade in the region, while the U.K.’s FTSE 100 UKX, -0.06% was heading less than 0.1% lower.
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.686% was little changed at 0.68%. Bond prices move inversely to yields.
Gold prices for December delivery GCZ20, +1.15% rose 1.2%, to trade at $2,022 an ounce. U.S. crude-oil prices CLU20, -0.30% shed 0.3% to trade at $42.76 a barrel.
The ICE U.S. Dollar Index DXY, -0.55%, a gauge of the buck against a half-dozen major rivals, was down 0.6% to 92.33, hanging around its lowest level since 2018.
