By Investors Hub
The major U.S. index futures are pointing to a higher opening on Tuesday, with stocks likely to see further upside following the strength seen in the previous session.
A batch of positive earnings news is likely to generate early buying interest, with several big name companies reporting better than expected quarterly results.
With traders reacting positively to earnings and economic news, stocks moved notably higher over the course of the trading session on Monday. The major averages added to the strong gains posted last week.
The major averages ended the day firmly in positive territory but off their highs of the session. The Dow jumped 212.90 points or 0.9 percent to 24,573.04, the Nasdaq climbed 49.63 points or 0.7 percent to 7,156.28 and the S&P 500 advanced 21.54 points or 0.8 percent to 2,677.84.
The strength on Wall Street partly reflected a positive reaction to earnings news from financial giant Bank of America (BAC), which reported first quarter earnings that beat analyst estimates on strong loan growth.
Positive sentiment was also generated by a report from the Commerce Department showing stronger than expected retail sales growth in the month of March.
The report said retail sales climbed by 0.6 percent in March after edging down by 0.1 percent in February. Economists had expected retail sales to rise by 0.4 percent.
Excluding a rebound in auto sales, retail sales edged up by 0.2 percent in March, matching the uptick seen in the previous month as well as economist estimates.
“Overall, consumer spending has been disappointing in 1Q18, which is partially weather-related, but today’s report suggests the slowdown was transitory,” said James Knightley, Chief International Economist at ING.
“We remain upbeat for the coming months,” he added. “Consumer confidence is high, supported by strong employment gains, rising wages and tax cuts. As such we look for a more positive contribution from consumer spending to overall GDP growth in 2Q18.”
Meanwhile, traders have largely shrugged off a separate report from the National Association of Home Builders unexpectedly showing a modest drop in homebuilder confidence in the month of April.
The report said the NAHB/Wells Fargo Housing Market Index edged down to 69 in April from 70 in March. Economists had expected the index to come in unchanged.
Stocks remained positive in afternoon trading as traders digested news that President Donald Trump intends to nominate Richard Clarida as Federal Reserve Vice Chairman.
Clarida is currently an economics professor at Columbia University and also serves as Global Strategic Advisor for PIMCO.
Trump also intends to nominate Kansas State Bank Commissioner Michelle Bowman as a member of the Fed’s Board of Governors.
Transportation stocks showed a substantial move to the upside on the day, driving the Dow Jones Transportation Average up by 2.3 percent. With the jump, the average reached its best closing level in almost a month.
Trucking company J.B. Hunt Transport Services (JBHT) led the transportation sector higher after reporting first quarter earnings growth on better than expected revenues.
Significant strength was also visible among tobacco stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Tobacco Index. The index ended the session at a record closing high.
Chemical, utilities, brokerage, and telecom stocks also saw considerable strength, moving higher along with most of the other major sectors.
Adedapo Adesanya