Market Snapshot: Stock-market index futures drift slightly higher, a day after S&P 500 nabs record

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U.S. stocks were set to see subdued but slightly higher trade on Wednesday, a day after the S&P 500 index scored its first record close in six months, marking a historic comeback for the market in the face of the coronavirus pandemic.

Investors are poring over quarterly results from a number of retailers, including Target Corp. and Loews Corp., and watching for progress in breaking the stalemate between Democrats and Republicans in Congress on additional measures to help the unemployed in the wake of the pandemic. Later Wednesday the market will parse minutes from the Fed Reserve’s last policy meeting to glean further clues about the U.S.’s economic outlook.

How are stock benchmarks doing?

Futures for the Dow Jones Industrial Average
US:YM00
US:YMU20
were trading 25 points, or 0.1%, higher at 27,742, those for the S&P 500 index
US:ES00
US:ESU20
were up 2 points, or 0.1%, at 3,390, while Nasdaq-100 futures
US:NQ00
US:NQU20
were down 25.75 points at 11,381, a loss of 0.3%.

On Tuesday, the Dow
US:DJIA
slipped 66.84 points, or 0.2%, to close at 27,778.07. The S&P 500 index
US:SPX
gained 7.79 points, or 0.2%, finishing at a record 3,389.78, its first all-time closing high since Feb. 19. The Nasdaq Composite Index
US:COMP
added 81.84 points to reach 11,210.84, also a record close and its 34th of the year.

What’s driving the market?

After securing a record close on Tuesday, investors are eager to determine whether healthy earnings reports from prominent retailers mean the economic recovery has momentum or whether fears that the pace of the stock market’s advance has been too fast is justified.

Early Wednesday, news from retailers provided some cause for further optimism after Target Corp.
US:TGT
reported a record-setting second-quarter early Wednesday, with comparable sales soaring a record 24.3%, and digital comparable sales nearly tripling, up 195%. Similarly, home-improvement retailer Lowe’s Cos.
US:LOW
reported fiscal second-quarter profit and sales that rose well above expectations, boosted by a consumer focus on home repair and maintenance activities during the pandemic.

The earnings reports may provide some comfort for investors who have worried that the market’s recovery has been too narrowly based on technology and tech-related names.

“It is astonishing to me that the market has done so well in the face of pretty weak economic numbers, with so many uncertainties out there,” said John Carey, portfolio manager and director of equity income for Amundi Pioneer. “So yes, the market is at all-time peaks, which to some extent does surprise me, but when you look more closely you see that it’s very bifurcated.”

Record highs for the stock market don’t just benefit Wall Street, Carey noted in an interview with MarketWatch. Households across America are paying close attention to their retirement accounts, and that’s helping sustain consumer spending, he said. “People are feeling more comfortable that their nest egg is intact. We just have to be careful because if we have another market tailspin again, which is possible when you have a concentration in a few stocks that are pretty expensive, that could put a damper on the economic recovery that we’ve seen to date.”

An economic downturn could come from any one of a number of sources, including slow progress on further coronavirus fiscal stimulus in Congress and rising Sino-American tensions.

Democratic House Speaker Nancy Pelosi said in an interview with Politico that she would be willing to reconvene negotiations and consider a compromise on a coronavirus relief package, after $600 a week in additional unemployment benefits expired at the end of last month, leaving many workers in the lurch.

Meanwhile, President Donald Trump suggested that he would be willing to let a phase-one agreement between the U.S. and China collapse as animosities between the parties ratchet higher. Separately, U.S. universities and colleges have been warned by the State Department that they should divest Chinese stockholdings, ahead of a potential delisting of those firms, wrote Bloomberg.

Late Tuesday, Wall Street watched Joe Biden secure the Democratic nomination for president on Tuesday, with market participants having so far determined that his moderate platform may be one that is favorable to investors compared to progressives like Vermont Sen. Bernie Sanders and Massachusetts Sen. Elizabeth Warren.

Read: Why stock-market investors should brace for the ‘most litigated’ election in U.S. history

Looking ahead, investors will be watching at 2 p.m. Eastern for the release of the minutes from the Fed’s July 28-29 meeting, which could reveal the central bank’s further policy prescriptions to combat the economic devastation from COVID-19.

Which stocks are in focus?
  • Shares of Momenta Pharmaceuticals Inc.
    US:MNTA
    rocketed 69% into record territory in premarket trading Wednesday, after the biotechnology company announced an agreement to be acquired by Johnson & Johnson
    US:JNJ
    in a deal valued at $6.5 billion.

  • President Donald Trump voiced support on Tuesday for Oracle Corp.
    US:ORCL
    to buy the U.S. operations of TikTok, adding a fresh wrinkle to the bidding for the Chinese-owned video-sharing app, whose parent ByteDance is also in negotiations with Microsoft Corp.
    US:MSFT
    over a possible acquisition that also appeared to be endorsed by the president.

  • Advance Auto Parts Inc.
    US:AAP
    scored a set of price-target increases, with J.P.Morgan boosting its forecast to $183, and Credit Suisse and Wedbush hiking their target to $180.

  • TJX
    US:TJX
    on Wednesday reported sales that slightly edged analyst expectations, but a deeper per-share loss than Wall Street had expected.

  • Target
    US:TGT
    was a big winner in premarket trading with shares surging 8.7% after the big-box retailer reported better-than-expected results for the quarter, including a 24.3% in same-store-sales shoppers stocked up on household items during stay-at-home orders.

  • Lowe’s
    US:LOW
    shares also gained, climbing 0.4%, after the hardware store chain’s financial results surpassed estimates as people continued improving their homes during the pandemic.

How are other markets trading?

In Asia overnight, China’s CSI 300 index
XX:000300
closed 1.4% lower, while Hong Kong’s Hang Seng Index
HK:HSI
fell 0.7%. Japan’s Nikkei 225
JP:NIK
added 0.3%.

In Europe, the Stoxx 600 Europe Index
XX:SXXP
and the U.K.’s FTSE 100
UK:UKX
were both 0.2% higher.

The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was 1.6 basis points lower at 0.658%. Bond prices move inversely to yields.

Gold prices for December delivery
US:GCZ20
were down 1%, to $1,992.50 an ounce. U.S. crude-oil prices
US:CLU20
fell 0.8% at $42.54 a barrel.

The ICE U.S. Dollar Index
US:DXY
a gauge of the buck against a half-dozen major rivals, edged fractionally higher.

Read next:There will be no V-shaped recovery for consumer sentiment, DataTrek says

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