- U.S., Chinese officials agree to keep talking, report says
- Iran says further sanctions by U.S. closes door to diplomacy
- AbbVie to buy fellow drugmaker Allergan in $63 billion deal
Stock-index futures edged lower early Tuesday as investors awaited remarks by Federal Reserve Chairman Jerome Powell, while also looking ahead to this weekend’s expected meeting between President Donald Trump and Chinese leaders Xi Jinping amid growing hopes for cease-fire in the U.S.-China trade war.
Futures on the Dow Jones Industrial Average YMU19, +0.04% fell 21 points, or 0.1%, to 26,741, while S&P 500 futures ESU19, -0.02% were off 3.85 points, or 0.1%, at 2,948.25. Nasdaq-100 futures NQU19, -0.09% declined 12.75 points, or 0.2%, to 7,746.
The Dow DJIA, +0.03% eked out a gain of 8.41 points, or less than 0.1%, on Monday to end at 26,727.54, leaving it just 0.4% — or around 100 points — away from its all-time closing high of 26,828.39 scored on Oct. 3. The S&P 500 SPX, -0.17% ended 5.11 points lower, down 0.2%, at 2,945.35, while the Nasdaq Composite COMP, -0.32% fell 26.01 points, or 0.3%, to end at 8,005.70.
Stocks have rallied in June, fueled in part by growing expectations the Federal Reserve will deliver an interest-rate cut as early as next month, with perhaps additional easing by year-end. Last week’s Fed policy meeting, and remarks by Powell, reaffirmed those expectations. Moves toward easing by other major central banks have also been credited with lifting sentiment.
Trump and Xi will likely meet Saturday on the sidelines of the G-20 meeting. Expectations they will agree at least to a cease-fire that would avert the imposition of tariffs on a further $300 billion of Chinese imports have also been credited with lifting stocks, though some analysts view those hopes as misplaced.
“The recent G-7 central bank market rally is stalling as the market does not seem that confident of a Trump/Xi Jinping trade break through at this week’s G-20 gathering,” said Dean Popplewell, vice president of market analysis at Oanda, in a note.
Powell will be in the spotlight Tuesday in a busy day for Fed speakers. He’s set to deliver a speech on the economic outlook and the Fed’s monetary policy review at the Council on Foreign Relations in New York at 1 p.m. Eastern.
Meanwhile, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke by phone with Chinese Vice Premier Liu He on Monday, Bloomberg reported, with China’s commerce ministry saying they had agreed to continue communicating.
Ahead of Powell’s remarks, New York Fed President John Williams is slated to give opening remarks at a financial forum at 8:45 a.m. Eastern, while Atlanta Fed President Raphael Bostic participates in a panel discussion on housing at noon Eastern. St. Louis Fed President James Bullard, who dissented at last week’s Fed meeting in favor of a quarter-point rate cut, is speaking at his bank’s Homer Jones Memorial Lecture at 5:30 p.m. Eastern.
Investors are also watching the Middle East, with ongoing tensions between the U.S. and Iran driving gold prices toward a six-year high. Iran said Trump’s decision Monday to impose additional sanctions on Iran had closed the door to diplomatic negotiations. Iran last week downed a U.S. military drone near the Strait of Hormuz, a key oil transportation choke point, and has been blamed by Washington for attacks on tankers in the area. Iran has denied responsibility for the tanker attacks.
Shares of Allergan PLC AGN, -0.95% soared in premarket trade after AbbVie Inc. ABBV, -0.42% said it agreed to buy the pharmaceutical company in a deal valued at $63 billion. Shares of Allergan jumped 31% in premarket action, while AbbVie shares were off 8.7%.
FedEx Corp. FDX, -2.69% is scheduled to report fourth-quarter results after the closing bell. Separately, the company, after previously botching deliveries for Huawei Technologies, filed a lawsuit on Monday to stop the U.S. government from requiring the package giant to enforce a crackdown on the Chinese telecom equipment maker.
Shares of home builder Lennar Corp. LEN, +0.12% rose ahead of the bell after reporting second-quarter earnings and revenue well above expectations.
Grubhub Inc. shares GRUB, +1.43% rose 5% in premarket trade after Citi Research analyst Mark May upgraded the stock to buy from hold, citing the food-delivery company’s ability to continue to expand food sales.
In addition to Fed speakers, the economic calendar includes Case-Shiller home-price data for April at 9 a.m. Eastern, while a June consumer-confidence reading is due at 10 a.m. Eastern and May new home sales are set for release at the same time.