Dipo Olowookere
By Investors Hub
The major U.S. index futures are pointing to a moderately higher opening on Tuesday, with stocks likely to extend the upward move seen in the previous session.
Continued buying interest may be generated in reaction to news of the preliminary trade agreement between the U.S. and Mexico.
President Donald Trump indicated the trade deal with Mexico is intended to replace the North American Free Trade Agreement but suggested Canada could be excluded from the new pact.
The president said negotiations with Canada would begin shortly but argued Canada must negotiate ?fairly? and threatened to raise tariffs on Canadian auto imports if an agreement cannot be reached.
Treasury Secretary Steven Mnuchin told CNBC he remains hopeful a revamped trade deal will get done with Canada but said the U.S. is ready to go forward with the agreement with Mexico.
?I think our objective is to try to get Canada on board quickly,? Mnuchin said on CNBC?s ?Squawk Box? on Tuesday. ?This is a great deal for American workers.?
Stocks showed a strong move to the upside during trading on Monday, adding to the gains posted last week. With the upward move on the day, the Nasdaq and the S&P 500 climbed to new record closing highs and the Dow reached its best closing level in nearly seven months.
The major averages ended the day off their highs of the session but still firmly positive. The Dow Jumped 259.29 points or 1 percent to 26,049.64, the Nasdaq advanced 71.92 points or 0.9 percent to 8,017.90 and the S&P 500 climbed 22.05 points or 0.8 percent to 2,896.74.
The continued strength on Wall Street came as Trump confirmed reports the U.S. has reached a preliminary trade deal with Mexico.
During a televised conference call with Mexican President Enrique Peña Nieto, Trump praised the U.S. and Mexican teams that negotiated the agreement, which he argued would be good for both countries.
“It’s a big day for trade, a big day for our country,” Trump said. A lot of people thought we’d never get here because we all negotiate tough. We do, and so does Mexico. And this is a tremendous thing.”
The president said the new deal would be called the United States-Mexico Trade Agreement rather than NAFTA, raising questions about the inclusion of Canada.
“We’ll get rid of the name NAFTA,” Trump said. “It has a bad connotation because the United States was hurt very badly by NAFTA for many years.”
Trump indicated the U.S. would soon begin negotiations with Canada but suggested that any agreement could be a separate deal.
“I think we’ll give them a chance to probably have a separate deal,” Trump said of Canada. “We could have a separate deal, or we could put it into this deal.”
Biotechnology stocks showed a substantial move to the upside on the day, driving the NYSE Arca Biotechnology Index up by 2.4 percent. With the jump, the index reached a record closing high.
Optimism about the U.S.-Mexico trade deal also contributed to considerable strength among steel stocks, resulting in a 1.7 percent advance by the NYSE Arca Steel Index.
Significant strength also emerged among gold stocks, as reflected by the 1.6 percent gain posted by the NYSE Arca Gold Bugs Index. Gold stocks benefited from some further upside by the price of the precious metal.
Semiconductor, financial, and chemical stocks also saw notable strength on the day, moving higher along with most of the other major sectors.
