U.S. stock benchmarks mostly kicked off Wednesday trade with tentative gains, suggesting investors were finding few reasons to push shares decisively higher following a multiday advance that has taken indexes to repeated records.
Where are the major benchmarks trading?
The Dow Jones Industrial Average DJIA, -0.04% dipped 26 points to 26,046, a decline of less than 0.1%. S&P 500 index SPX, +0.12% edged up by about 2 points, or 0.1%, at 2,900, while the Nasdaq Composite Index COMP, +0.32% added 16 points, or 0.2%, at 8,046.
Stocks ended with only marginal gains in Tuesday’s session, but that was enough to give all three major indexes their third straight daily advance, and for both the S&P 500 and the Nasdaq to close at a record for three straight days.
For the month of August, the Dow is up 2.6%, the S&P is up 2.9%, and the Nasdaq is up 4.7%. Both the S&P and the Nasdaq are on track for their fifth straight monthly gain.
What’s driving market activity?
Recent equity advances have come on an apparent easing of tensions between the U.S. and other major countries on trade policy.
Late Tuesday, Canadian Foreign Minister Chrystia Freeland met with the Trump administration in an attempt to resolve testy discussions between the two countries on trade, coming on the heels of the U.S. and Mexico’s announcement of progress toward a bilateral trade agreement that may ultimately result in a refashioning of the trilateral North American Free Trade Agreement.
The threat of tensions escalating into a full-blown trade war have been a primary driver of market activity in both directions for the past several months. While investors continue to watch the situation, particularly ahead of the latest round of negotiations with China and other major trading partners, stocks have largely looked past the issue of late. Instead, the uptrend in equities has been supported by strong corporate earnings and improvements in economic data.
On Tuesday, a reading of consumer confidence came in at its highest level since October 2000. While this pointed to growing optimism about the economy, a factor that could continue to fuel market gains, high levels of confidence can also be a contrary indicator if it suggests rising complacency about the risks facing stocks.
The day’s trading could be light, as is typical for late August. Many traders are out for vacation, and with an absence of earnings or a lot of market-relevant headlines, volumes could be soft and daily moves tepid.
Read more: Why a trend divergence in the S&P 500 and the VIX may spell trouble for stocks
What data are in focus?
An update to second-quarter gross domestic product came in at 4.2%, slightly hotter than estimates that matched the initial reading at 4.1%, which represented the fastest pace of expansion in almost four years.
Later, a report on July pending home sales is scheduled to be released at 10 a.m. Eastern Time. Investors have turned cautious on the sector recently, as it has seen a number of weak data points. Recently, existing-home sales fell to a 2-½-year low.
Read: The 60 events that could rattle investors in the months ahead
What are market experts saying?
“Anything near 4.0% should be viewed favorably by the street, as it shows the continued power of our economic engine. Today’s estimate should also serve as another lesson to shelf geopolitical noise and focus on the fundamentals, which are nothing if not strong,” wrote Mike Loewengart, v.p. of investment strategy at E-Trade Financial Corp.
“Rising earnings and Goldilocks-like portions of modest inflation and relatively low interest rates continue to bolster and propel equity prices,” wrote Robert Haworth, senior investment strategy director at U.S. Bank Wealth Management.
“Overall equity performance has remained remarkably resilient, recently brushing aside seemingly damaging political outcomes. More important than bull market duration, the fundamental and technical backdrops appear constructive for equities to trend still higher through 2018.”
What stocks are in focus?
Hewlett Packard Enterprise Co. HPE, +2.36% reported third-quarter results that topped expectations and gave an outlook that was above forecasts. Shares were up 2.9% in early action.
Box Inc. BOX, -11.20% late Tuesday gave an earnings and sales outlook that was below expectations. Shares of Box slipped by 10%.
Cannabis producer Tilray Inc. TLRY, +14.23% late Tuesday reported second-quarter sales that doubled from the prior year, thanks to the sale of more high-potency weed and extracts. The company’s stock added 15.2%, in early trade.
Salesforce.com Inc. CRM, +0.74% will be in view ahead of the release of the company’s results, which will be released after the market closes. The results will be studied for the impact of the company’s recent acquisition of MuleSoft, the largest deal in its history. Share of the software-as-a-service company edged up 0.2%.
Also read: Stocks in these 5 tech hardware companies should keep flying high
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