U.S. Stocks May Open Sharply Higher On Report Of Infrastructure Plan, Retail Sales Data

Following the substantial rebound seen over the course of the previous session, stocks are likely to see further upside in early trading on Tuesday. The major index futures are currently pointing to a sharply higher open for the markets, with the Dow futures up by 762 points.

The upward momentum has been attributed to a report from Bloomberg indicating the Trump administration is preparing a nearly $1 trillion infrastructure proposal as part of an effort to support the economy following the coronavirus pandemic.

People familiar with the plan told Bloomberg a preliminary version would reserve most of the money for traditional infrastructure work, like roads and bridges, but would also set aside funds for 5G wireless infrastructure and rural broadband.

Bloomberg noted President Donald Trump is scheduled to discuss rural broadband access at a White House event on Thursday.

The people familiar with the plan told Bloomberg the administration sees an existing infrastructure funding law that is up for renewal by September 30 as a possible vehicle for the broader package.

Positive sentiment may also be generated in reaction to a report from the Commerce Department showing U.S. retail sales rebounded by much more than anticipated in the month of May.

The Commerce Department said retail sales skyrocketed by 17.7 percent in May after plunging by a revised 14.7 percent in April.

Economists had expected retail sales to spike by 8.0 percent compared to the 16.4 percent nosedive originally reported for the previous month.

Excluding a substantial rebound in auto sales, retail sales still surged up by 12.4 percent in May after plummeting by 15.2 percent in April. Ex-auto sales were expected to jump by 5.5 percent.

On the heels of the much better than expected jobs report released earlier this month, the data is likely to reinforce optimism about a quick economic recovery.

Just before the start of trading, the Federal Reserve is due to release its report on industrial production in the month of May. Industrial production is expected to jump by 2.9 percent in May after plunging by 11.2 percent in April.

Federal Reserve Chair Jerome Powell is also scheduled to begin his testimony before the Senate Banking Committee shortly after the open.

The National Association of Home Builders is also due to release its report on homebuilder confidence in the month of June, while the Commerce Department is scheduled to release its report on business inventories in the month of April.

Stocks showed a substantial turnaround over the course of the trading session on Monday after moving sharply lower at the open. The major averages all climbed well off their early lows and firmly in positive territory.

The major averages fluctuated going into the close but held on to notable gains. The Dow rose 157.62 points or 0.6 percent to 25,763.16, the Nasdaq surged up 137.21 points or 1.4 percent to 9,726.02 and the S&P 500 climbed 25.28 points or 0.8 percent at 3,066.59.

In overseas trading, stock markets across the Asia-Pacific region moved significantly higher during trading on Tuesday. Japan’s Nikkei 225 Index soared by 4.9 percent, while Hong Kong’s Hang Seng Index jumped by 2.4 percent.

The major European markets have also shown substantial moves to the upside on the day. While the German DAX Index has spiked by 3.8 percent, the U.K.’s FTSE 100 Index is up by 3.6 percent and the French CAC 40 Index is up by 3.4 percent.

In commodities trading, crude oil futures are jumping $1.20 to $38.32 a barrel after climbing $0.86 to $37.12 a barrel on Monday. Meanwhile, after slumping $10.10 to $1,727.20 an ounce in the previous session, gold futures are rising $4.80 to $1,732 an ounce.

On the currency front, the U.S. dollar is trading at 107.37 yen compared to the 107.33 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1297 compared to yesterday’s $1.1323.

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