Market Snapshot: Dow futures rise on trade deal optimism, stocks heading for 3-day win streak

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Hope for a partial U.S. – China trade deal on Tuesday looked likely to push stocks to a another round of records for the three main U.S. equity benchmarks, a day after the Dow industrials joined the Nasdaq and S&P 500 at all-time highs for the first time since mid July.

How are major indexes performing?

Futures for the Dow Jones Industrial Average YMZ19, +0.28% were up 72 points, or 0.3%, at 27,452, those for the S&P 500 index ESZ19, +0.20% gained 6.80 points, or 0.2%, at 3,082.50, while Nasdaq-100 futures NQZ19, +0.24% advanced 23.25 points, or 0.3%, at 8,239.

On Monday, the Dow DJIA, +0.42% advanced 114.75 points, or 0.4%, to finish at 27,462.11, surpassing its previous record close of 27,359.26, set on July 15. The Nasdaq Composite Index COMP, +0.56% gained 46.80 points, or 0.6%, to close at 8,432.20, while the S&P 500 index SPX, +0.37% rose 11.36 points, or 0.4%, to end at 3,078.27. The Nasdaq and S&P 500 ended at record highs for the second consecutive session.

All three equity benchmarks also hit records on Monday. The last time the three major indexes ended at record highs on the same day was July 15, according to Dow Jones Market Data. The Dow’s year-to-date gain now stands at around 18%, while the S&P 500 is up more than 22% and the Nasdaq more than 27% so far this year.

What’s driving the market?

Optimism over negotiations between the U.S. and China remained intact Tuesday, after helping to drive benchmark indexes further into record territory on Monday, even though reports suggest that Beijing is driving a hard bargain against the backdrop of further signs of weakness in the world’s second-largest economy.

As part of a so-called phase one agreement Chinese officials are pushing for the removal of U.S. import duties that have been imposed since September as well as eliminating tariffs that are set to be imposed on Dec. 15 on China’s imports.

The Wall Street Journal and Financial Times (paywall), citing people familiar, reported that U.S. and Chinese officials were actively considering rolling back some tariffs to complete the partial trade agreement.

The U.S. has already put off tariff hikes from 25% to 30% on $250 billion of Chinese imports that were to have taken effect in October, and has suggested it may put off tariffs on another $160 billion in Chinese goods set to take effect Dec. 15 if an initial trade deal is signed

Chinese negotiators want the removal of 15% tariffs on about $125 billion worth of goods that went into effect Sept. 1 and the $250 billion of import duties, CNBC reported.

Speaking in Shanghai at the second annual China International Import Expo on Tuesday, President Xi Jinping said about trade that the People’s Republic would open its doors “only wider,” while avoiding to make negative comments about the tense Sino-American trade discussions, WSJ reported and Bloomberg News reported.

The appearance of restraint was viewed as a good sign as the two countries attempt to strike a preliminary deal to resolve their protracted dispute.

Xi’s comments came as the People’s Bank of China cut interest rates on its medium term lending facility for the first time since 2016 to boost the country’s flagging economy, with the offshore yuan USDCNH, -0.5403% and onshore yuan USDCNY, -0.4865% briefly touching its weakest level in about three months.

Back in August, the yuan broke through the psychologically important level of 7, a level Beijing had previously defended. It was the first time since 2008 the currency had weakened past that level in the onshore market.

“In summary, the trade talks are moving in the direction we had anticipated, as China leans on the Trump administration to remove some of the present tariffs to seal the first phase of a trade deal,” wrote Peter Cardillo, chief market economist at Spartan Capital Securities

Looking ahead investors will watch for a report on U.S. international trade at 8:30 a.m. Eastern Time, and a reading on the services sectdor from the Institute of Supply Management at 10 a.m., with a reading of 53.5 expected from a consensus of economists polled by Econoday. Any reading above 50 indicates improving conditions.

A pair of speakers also are expected: Dallas Fed President Robert Kaplan to speak at a real estate event in Dallas at 12:40 p.m. ET, while Minneapolis Federal Reserve Bank President Neel Kashkari will speak at 6 p.m. ET in his home state.

Which stocks are in focus?

Shares in Uber Technologies UBER, -0.92% fell ahead of the opening bell after the ride-hailing company Monday posted another quarterly loss but forecast that it would reach profitability by the end of 2021.

Peloton Interactive Inc. shares PTON, -1.52% jumped more than 4% before the bell after the exercise-equipment maker reported third-quarter results. Ch

Chesapeake Energy Corp.’s stock CHK, +8.33% sank nearly 10% in premarket trading Tuesday, after the oil-and-gas company reported a wider-than-expected loss on revenue the fell more than forecast.

Kroger Co. KR, +0.00%  rose in Tuesday premarket trading after the grocer announced a $1 billion share buyback program during its investor meeting.

How are other assets trading?

The yield of the 10-year U.S. Treasury note TMUBMUSD10Y, +2.33% rose 2.6 basis points to 1.815%.

West Texas Intermediate crude oil for December delivery CLZ19, +0.92% rose 0.7% to $56.96 a barrel on the New York Mercantile Exchange, while gold for December GCZ19, -0.62%  on Comex fell 0.5% to $1,503.70 an ounce.

The ICE U.S. dollar index DXY, +0.15%, a gauge of the greenback’s performance against its major rivals, rose 0.2% at 97.649.

In Asia overnight, the China CSI 300 000300, +0.62%  added 0.6%, Hong Kong’s Hang Seng Index HSI, +0.49%  advanced 0.5%. In Europe, the Stoxx Europe 600’s SXXP, +0.17% gained 0.2%.