Dipo Olowookere
By Investors Hub
The major U.S. index futures are pointing to a roughly flat opening on Tuesday following the climb to record highs seen in the previous session.
Traders may stick to the sidelines as they wait for further developments on the U.S.-China trade front, with optimism about a potential deal helping push stocks higher on Monday.
A statement from China?s Commerce Ministry revealed Chinese Vice Premier Liu He held a phone call with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin earlier today.
The statement said the two sides discussed how to resolve each other’s core concerns, reached consensus on how to resolve related issues, and agreed to maintain communication on the remaining issues in the first phase of agreement negotiations.
The upcoming Thanksgiving Day holiday may also contribute to light trading activity, with some traders choosing to make their moves on Monday before heading out for an extended break.
Nonetheless, recent upward momentum may lead to continued strength on Wall Street, as the way higher has recently seemed to be the path of least resistance.
Stocks showed a strong move to the upside over the course of the trading session on Monday, more than offsetting the modest pullback seen last week. With the upward move, the major averages ended the day at new record closing highs.
The major averages reached new highs going into the close of trading. The Dow climbed 190.85 points or 0.7 percent to 28,066.47, the Nasdaq surged up 112.60 points or 1.3 percent to 8,632.49 and the S&P 500 advanced 23.35 points or 0.8 percent to 3,133.64.
The strength on Wall Street partly reflected continued optimism about a U.S.-China trade agreement after a tabloid run by China’s ruling Communist Party discounted “negative” media reports and said the economic superpowers are “very close” to a phase one deal.
The state-backed Global Times also said China remains committed to continuing talks for a phase two or even a phase three deal with the United States.
President Donald Trump and Chinese President Xi Jinping have also recently made positive comments about a potential trade deal despite reports of complications arising that could delay the agreement until next year.
News on the merger-and-acquisition front also generated positive sentiment, as the deals suggest companies remain confident even with the uncertainty created by the U.S.-China trade dispute.
Shares of The Medicines Company (MDCO) moved sharply higher after the biopharmaceutical company agreed to be acquired by Swiss drugmaker Novartis for $9.7 billion or $85 per share in cash.
Jeweler Tiffany (TIF) also showed a strong move to the upside after agreeing to be acquired by France’s LVMH for $16.2 billion or $135 per share in cash.
Discount broker Charles Schwab (SCHW) also reached an agreement to acquire rival TD Ameritrade (AMTD) in an all-stock transaction valued at approximately $26 billion.
Biotechnology stocks turned in some of the market’s best performances on the day, with the NYSE Arca Biotechnology Index surging up by 2.5 percent to a seven-month closing high.
Significant strength also emerged among oil service stocks, as reflected by the 2.5 percent jump by the Philadelphia Oil Service Index. The strength in the sector came amid a modest increase by the price of crude oil.
Semiconductor stocks also saw considerable strength, driving the Philadelphia Semiconductor Index up by 2.4 percent.
Nvidia (NVDA) posted a standout gain after Morgan Stanley upgraded the graphics chip maker’s stock to Overweight from Equal-weight.
Brokerage, computer hardware, tobacco and steel stocks also saw notable strength on the day, while gold stocks came under pressure amid a decrease by the price of the precious metal.
