(Reuters) – Wall Street was set to hit another record high at the open on Tuesday on continued optimism that Washington and Beijing would agree on a deal to end a damaging trade war that has posed one of the biggest risks to global economic growth.
A trader works on the floor at the New York Stock Exchange (NYSE) in New York, U.S., November 18, 2019. REUTERS/Brendan McDermid
The fallout from the tit-for-tat tariff dispute over the past 16 months has already led to a slowdown in China and shown up in some economic indicators in the United States.
But U.S. stock markets have climbed steadily to new record levels this month, shrugging off negative headlines on the trade front.
On Monday, a temporary reprieve in sanctions on China’s Huawei Technologies Co Ltd by the Trump administration helped ease concerns, which were earlier triggered by a report that China was pessimistic about reaching a deal.
“Markets remain convinced that we will see the ‘phase-one’ trade deal finalized before the next major tariff increase deadline of Dec. 15,” said Edward Moya, senior market analyst at OANDA in New York.
A largely better-than-expected corporate earnings season has also fuelled a Wall Street rally over the past few weeks, with the benchmark S&P 500 setting new records almost every day.
Nearly three-quarters of the 461 S&P 500 companies to report results so far have topped profit estimates, according to Refinitiv data. Although those numbers reflect significantly lowered expectations.
Kohl’s Corp (KSS.N) dropped 13.2% as the department store operator slashed its annual profit expectations, ahead of the all-important holiday shopping season.
Target Corp (TGT.N) and Lowe’s are due to report results later this week.
Also on the agenda this week are minutes from the Federal Reserve’s latest policy meeting, where it cut interest rates for the third time this year, and data on U.S. manufacturing and services sectors.
At 8:50 a.m. ET, Dow e-minis 1YMcv1 were up 34 points, or 0.12%. S&P 500 e-minis EScv1 were up 6.25 points, or 0.2% and Nasdaq 100 e-minis NQcv1 were up 30 points, or 0.36%.
Among other stocks, Broadcom Inc (AVGO.O) rose 2% after Morgan Stanley upgraded the chipmaker’s stock to “overweight” from “equal-weight”.
Boeing Co (BA.N) gained 1.1% as airlines announced plans to order up to 50 of the planemaker’s 737 MAX jets worth $6 billion at list prices at the Dubai Airshow.
But shares of AT&T Inc (T.N) slipped 1.7% after MoffettNathanson downgraded the U.S. wireless carrier’s stock to “sell” from “neutral”.
Reporting by Arjun Panchadar in Bengaluru; Editing by Anil D’Silva