U.S. stock-index futures were little changed on Tuesday, as the market’s recent uptrend appeared intact, although investors found few reasons to push shares decisively higher following three straight days of gains and with major indexes near records.
What are the major benchmarks doing?Futures for the Dow Jones Industrial Average rose 17 points to 25,775, a gain of 0.1%. Futures for the S&P 500 were up less than one point to 2,859. Futures for the Nasdaq 100 were up 2.5 points to 7,389, a move of less than 0.1%.
Equities have trended higher of late. All three major indexes have risen for three straight sessions; on Monday, the Dow gained 0.4% while the S&P was up 0.2% and the Nasdaq rose 0.1%, with positive sentiment boosted by a pair of multi-billion-dollar deals.
At current levels, the S&P is less than 0.6% below all-time highs while the Nasdaq is 1.4% below its record. The Dow is 3.2% under is own, but it is very close to exiting a correction it has been mired in since February.
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What’s driving the market?With the second-quarter earnings season essentially over and no economic data on tap, investors are turning their attention to upcoming news from the Federal Reserve. The minutes from the central bank’s latest meeting will be released on Wednesday, and on Friday, Fed Chairman Jerome Powell will give a speech at the Fed’s annual summer retreat in Jackson Hole.
Both the minutes and the speech will be scoured for any insight into what the Fed sees as potential problem spots for the economy — in particular, market participants will be looking to hear Powell’s thoughts on trade policy and whether the currency crisis in Turkey could spread to other emerging markets or regions — as well as for any clues into the Fed’s policy plans on interest rates.
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The speech could take on political overtones this year, after multiple media outlets on Monday reported that President Donald Trump had criticized Powell. Trump said he was “not thrilled” with the Fed chairman, who he had appointed to replace Janet Yellen, and that he expected “more help” from the central bank. Reuters reported that Trump said he would continue criticizing the Fed should it continue to raise short-term interest rates, which the central bank has indicated it will do at a steady clip.
This is not the first time Trump has called out the Fed for raising rates. When he did so in July, Powell stressed that the Fed operated independently of political considerations.
Separately, investors are continuing to monitor trade relations between the U.S. and its major trading partners, with talks between the U.S. and China set to resume on Wednesday.
What are market analysts saying?“Should the two sides manage to broker a truce we would expect risk sentiment to lift dramatically, catapulting the markets higher,” wrote Jasper Lawler, head of research at the London Capital Group. “Let’s not forget that the trade war story has been weighing on stocks, pressuring equities for the last few months so any signs that the risk is moderating on a serious scale will boost investors’ appetite for riskier assets and push equity indices higher.”
Speaking about Trump’s comments against Powell, Lawler wrote: “Trump could be sowing the seed for market perception problems later down the line. For example, should the stronger dollar result in weaker economic data moving towards December and the Fed decides not to hike. The market could question whether the Fed opted not to hike on the basis of data or to appease Trump? So, whilst Trump will not influence the path of rate hikes, his comments could impact on market’s perception of what is happening, which is an equally dangerous game to be playing.”
What stocks are in focus?Toll Brothers Inc. TOL, +0.96% could be in focus, as the homebuilder is scheduled to report its quarterly results before the market opens.
Kohl’s Corp. KSS, +3.15% and TXJ Companies Inc. TJX, +1.30% are also scheduled to report.
After the market closes, Urban Outfitters Inc. URBN, +1.91% and Red Robin Gourmet Burgers Inc. RRGB, +0.89% are expected to report.
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