U.S. stock-index futures were slightly higher on Monday, with major indexes poised to open near multimonth highs as investors remained optimistic that progress was being made in the contentious trade disputes between the U.S. and its major trading partners.
What are the major markets doing?Futures for the Dow Jones Industrial Average YMU8, +0.32% rose 70 points to 25,742, a gain of 0.3%. Futures for the S&P 500 ESU8, +0.23% were up 6 points to 2,857.50, a gain of 0.2%. Futures for the Nasdaq-100 NQU8, +0.40% added 24.75 points, or nearly 0.4%, to 7,414.
U.S. equities rose sharply last week, on signs of improving trade relations, as well as signs of stabilization in Turkey’s currency market. The Dow Jones Industrial Average DJIA, +0.43% jumped 1.4%, a move that took it to its highest close since February. The S&P 500 SPX, +0.33% added 0.6% and is within 1% of record levels. The Nasdaq Composite Index COMP, +0.13% dipped 0.3% over the course of last week, but it is also within striking distance of record levels.
What factors are driving markets?With the second-quarter earnings season largely over, trading may continue to be driven by shifting geopolitical factors. Trade will likely remain a key focus for investors, with any sign of improving or deteriorating relations between the U.S. and China driving a corresponding move in investor sentiment.
The latest trade development gave some room for optimism. The Wall Street Journal reported that negotiators in both the U.S. and China were mapping out talks with the aim of resolving the trade dispute by November. Such an outcome would remove a huge overhang of uncertainty over the markets. The news spurred big gains in Asian markets.
However, this week will also see the imposition of 25% tariffs on $16 billion worth of Chinese imports, an action by the Trump administration that China has said it would retaliate against.
Investors are also continuing to pay close attention to troubled regions like Turkey, where the lira and stock market have tumbled amid high inflation, political instability, and debt, and Italy, which is struggling under a debt burden of its own. While U.S. companies have limited direct exposure to either country, there are concerns that the weakness could spread into other regions or signal a broader downturn in economic growth.
On Sunday, The Wall Street Journal reported that the Trump administration rejected an effort by Turkey to tie the release of a U.S. pastor with relief for a major Turkish bank facing billions of dollars in U.S. fines, telling Ankara other issues are off the table until the minister is freed.
Opinion: If turmoil spreads in Europe, expect heavy flows into U.S. stocks
Looking ahead, Wednesday will see the release of minutes from the Federal Reserve’s most recent meeting, which could provide insight into the central bank’s thinking in terms of policy changes.
What are market experts saying?Rick Bensignor, president of Bensignor Strategies, said the uptrend in stocks was showing signs of “exhaustion,” although “we’re not opposed to putting on new long exposure if you understand and accept that the risk to make money on that capital is as high as its been in over 30 years.”
He added that historically speaking, this week tend to be quiet in terms of trading volume, as there is limited news from corporate earnings or economic data. “Thus, expect lower volumes and potentially exaggerated moves” as a result of the reduced liquidity.
What stocks are in focus?PepsiCo Inc. PEP, +0.62% said it would buy SodaStream International Ltd SODA, +0.84% for $3.2 billion, a value that implies a 11% premium to SodaStream’s Friday closing price.
Tesla Inc. TSLA, -8.93% will likely remain in focus as investors continue to weigh the electric-car company’s prospects for going private, as Chief Executive Officer Elon Musk recently — and unexpectedly — tweeted that he was attempting to do. Separately, it was reported that PIF, Saudi Arabia’s sovereign wealth fund, was in talks to invest in Lucid Motors Inc., a Tesla rival. Musk has reportedly been hoping an investment from PIF could aid in his taking Tesla private.
Roche Holding AG’s RHHBY, +0.57% Alecensa cancer drug has been granted marketing authorization in China.
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