Stock-index futures higher as S&P 500 nears all-time high

(MarketWatch) – Futures pointed to a higher start for U.S. stocks Tuesday, with the S&P 500 within striking distance of its all-time closing high, finding support on talk of a potential tax cut and signs of a slowdown in the spread of COVID-19 in the U.S.

What are major indexes doing?
Futures on the Dow Jones Industrial Average YM00 rose 273 points, or 1%, to 27,952, while S&P 500 futures ES00 were up 19.05 points, or 0.6%, at 3,371.75. Nasdaq-100 futures NQ00 were up 34.75 points, or 0.3%, at 11,106.75.

The Dow DJIA on Monday rose 357.96 points, or 1.3%, to finish at 27,791.44, while the S&P 500 SPX edged up 9.19 points, or 0.3%, to close at 3,360.47, just 0.8% away from its Feb. 19 record close of 3,386.15. The Nasdaq Composite COMP , meanwhile, dropped 42.63 points, or 0.4%, ending at 10,968.36.

What’s driving the market?
Investors took note of the drop by highflying tech shares Monday as industrials, energy and other beaten down sectors rallied. Some analysts have been looking for a potentially sharp near-term rotation out of highflying growth oriented stocks toward more cyclical stocks once there were signs the worst of the pandemic was past and the economy could head toward a fuller reopening.

White House officials and top Democratic lawmakers on Monday indicated they were ready to resume talks on a coronavirus aid package after President Donald Trump over the weekend signed executive orders that would extend some elements of existing help that lapsed at the end of July, though there as little sign of movement. Those measures, meanwhile, face legal and logistical hurdles.

Investors, however, did appear to seize on Trump’s remark late Monday, in which he said the administration was considering a capital-gains tax cut.

“This is old news in a sense as Trump has floated this idea before, but markets may have taken it more seriously this time as the president seems keen to bypass the deadlocked Congress if he can,” said Marios Hadjikyriacos, investment analyst at XM, in a note.

“Trump is also closing the gap on Biden in opinion polls, which is bullish in itself for markets, though he’s still well behind,” he said. The latest Real Clear Politics polling average shows presumptive Democratic nominee Joe Biden with a 6.9 percentage point lead over Trump.

Meanwhile, on the virus front, the number of new cases in the U.S. have fallen 18% over the past 14 days, according to a New York Times tracker, while deaths have fallen by 6%.

Russia registered the world’s first COVID-19 vaccine, President Vladimir Putin said on Tuesday. The announcement marked a milestone in the race to find a vaccine against the disease, but raised international concerns that Moscow had rushed the clinical evaluation of the treatment.

The National Federation of Independent Business said its Small Business Optimism Index fell to 98.8 in July down 1.8 points from June. Economists surveyed by The Wall Street Journal expected a reading of 99.9.

Investors will be watching the July producer-price index, due at 8:30 a.m. Eastern, for any sign that price pressures are building in the economy after the deflationary shock caused by the pandemic-induced shutdown. Economists surveyed by MarketWatch, on average, look for PPI to rise 0.3% after a 0.2% drop in June.

Which companies are in focus?
Shares of Canada Goose Holdings Inc. GOOS fell 7.3% in premarket trade, after the company reported a widening loss and a sharp drop in revenue.
Casper Sleep Inc. CSPR shares were in focus after the mattress seller reported a narrower-than-expected loss in the second quarter.

What are other markets doing?
In Asia trade, China’s CSI 300 index 000300 fell 0.9%, while Hong Kong’s Hang Seng Index HSI rose 2.1% and Japan’s Nikkei 225 Index NIK advanced 1.9%.

In Europe, the pan-European Stoxx 600 Europe Index SXXP jumped 2.1%, and the FTSE 100 UKX rallied 2.5%.

The yield on the 10-year Treasury note TMUBMUSD10Y rose 3 basis points to 0.604%. Bond prices move inversely to yields.

The greenback was down 0.3%, with the ICE U.S. Dollar Index DXY , a gauge of the buck against a half-dozen major rivals, at 93.32.

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