By Peter Nurse
Investing.com - U.S. stocks are seen trading sharply higher Tuesday, continuing the positive tone from the previous session, amid growing optimism based on progress towards a stimulus package and strong corporate earnings.
At 7:05 AM ET (1205 GMT), the Dow Futures contract was up 223 points, or 0.7%, S&P 500 Futures traded 29 points, or 0.8%, higher, and Nasdaq 100 Futures climbed 97 points, or 0.7%.
The Dow Jones Industrial Average closed 0.8%, or 229 points higher on Monday. The S&P 500 ended up 1.6%, while the Nasdaq Composite jumped 2.6%. These indices had reported their worst week since October last week.
President Joe Biden met with a group of Republican Senators late Monday in an attempt to get bipartisan support for a Covid relief plan amid opposition over the size of his proposed $1.9 trillion package. That said, top Democrats also filed a $1.9 trillion budget measure in a step toward bypassing Republicans, so that funds can still be raised even if their support doesn’t materialize in Congress.
Also helping the tone has been signs that the recent retail-driven market frenzy may be settling down. Shares in GameStop (NYSE:GME), the stock at the heart of last week’s protest, are falling in premarket trading Tuesday. Similarly, silver, which saw heavy buying on Monday, has dropped over 2% so far today.
The earnings season continues Tuesday, with numbers due from leading pharmaceutical Pfizer (NYSE:PFE) and oil major ExxonMobil (NYSE:XOM) before the bell and tech giants Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) after the market close.
This fourth quarter of earnings is shaping up to be one of the strongest on record. Overall, 37% of the companies in the S&P 500 have reported results, with about 82% reporting EPS above estimates, which is above the five-year average of 74%, according to FactSet.
U.S. economic data are thin on the ground Tuesday. The news out of Europe was slightly encouraging as the euro-zone economy contracted by less than expected in the fourth quarter of 2020. The region’s gross domestic product fell by 0.7% quarter-on-quarter, for a 5.1% year-on-year decline.
Oil prices pushed higher Tuesday, helped by newswire reports that the major oil producers have shown restraint in terms of production levels in January even as prices rose.
U.S. crude oil supply data from the American Petroleum Institute, due later Tuesday, will be keenly awaited, especially after last week’s hefty draw, while OPEC+'s Joint Technical Committee is also due to discuss the state of the market.
U.S. crude futures traded 2.6% higher at $54.92 a barrel, while the international benchmark Brent contract rose 2.5% to $57.76.
Elsewhere, gold futures fell 0.9% to $1,847.30/oz, while silver futures were down 6.3% after their spike on Monday at $27.57. EUR/USD traded 0.2% lower at 1.2033.