By Investors Hub
The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks likely to move back to the downside after ending the previous session mostly higher.
Lingering trade concerns may weigh on the markets even after President Donald Trump announced a new trade deal between the U.S., Mexico, and Canada to replace the North American Free Trade Agreement.
Trump praised the new United States-Mexico-Canada Agreement as an ?historic transaction? but also said it is ?too early to talk? with China about the escalating trade dispute between the two countries.
?Can’t talk now because they’re not ready,? Trump said of China. ?Because they have been ripping us for so many years, it doesn’t happen that quickly.?
He added, ?If politically, people force it too quickly, you’re not going to make the right deal for our workers and for our country.?
Reports of the last-minute cancellation of U.S. Defense Secretary Jim Mattis? trip to China have added to the concerns about rising tensions.
After an early move to the upside, stocks gave back some ground over the course of the trading session on Monday. The major averages pulled back off their highs of the session, with the tech-heavy Nasdaq sliding into negative territory.
The major averages eventually ended the day mixed. While the Nasdaq edged down 9.05 points or 0.1 percent to 8,037.30, the Dow climbed 192.90 points or 0.7 percent to 26,651.21 and the S&P 500 rose 10.61 points or 0.4 percent to 2,924.59.
The initial strength on Wall Street came amid easing trade concerns after U.S. and Canadian officials agreed on a trade deal to replace the North American Free Trade Agreement shortly before a midnight deadline.
The new trade deal, called the United States-Mexico-Canada Agreement, or USMCA, will reportedly provide more market access to U.S. dairy farmers and effectively cap Canadian automobile exports to the U.S.
A joint statement by U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said the agreement will “strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.”
President Donald Trump, a harsh critic of NAFTA, also praised the USMCA as a “historic transaction” in a post on Twitter on Monday.
“It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world,” Trump tweeted.
The leaders of the U.S., Canada, and Mexico are expected to sign the new agreement before the end of November, although it will still need to be approved by Congress.
However, the optimism about trade may have been partly offset by Trump’s subsequent remarks calling it “too early to talk” with China about a new trade agreement.
Traders largely shrugged off a report from the Institute for Supply Management showing a modest slowdown in the pace of growth in the U.S. manufacturing sector.
The ISM said its purchasing managers index fell to 59.8 in September from 61.3 in August, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 60.3.
The slightly bigger than expected decrease by the index came after it reached its highest level in over fourteen years in the previous month.
Energy stocks saw significant strength on the day, benefiting from a sharp increase by the price of crude oil. Reflecting the strength in the energy sector, the NYSE Arca Oil Index jumped by 1.8 percent and the Philadelphia Oil Service Index climbed by 1.3 percent.
Considerable strength was also visible among chemical stocks, as reflected by the 1.3 percent gain posted by the S&P Chemical Sector Index.
Praxair (PX) led the chemical sector higher after Chinese regulators approved the company’s proposed merger with Linde AG.
On the other hand, networking stocks came under pressure on the day, dragging the NYSE Arca Networking Index down by 2.5 percent.
