Stocks open at record highs amid Trump NSA pick and earnings
U.S. equities kicked off Tuesday trading on the right foot, notching fresh record highs following a key naming by the Trump administration and corporate earnings.
The White House announced Monday that Lieutenant General H. R. McMaster will become the new national security advisor. McMaster replaces Michael Flynn, who resigned last week.
“This is very, very good for the market,” said Quincy Krosby, market strategist at Prudential Financial, adding McMaster’s naming helps assuage some of the concerns that President Donald Trump’s administration is in disarray.
Investors also digested several corporate quarterly results, including retail giants Macy’s and Home Depot. Macy’s posted mixed results, beating earnings per share estimates but falling short on sales, while Home Depot exceeded Wall Street expectations.
“The positive guidance out of Home Depot points to a buoyant consumer,” said Krosby.
Stocks — which also managed record levels last week — have been on a rip-roaring rally since the U.S. election, as investors have piled on to bets that the new administration will be able to enact significant corporate tax cuts and deregulation.
Following equities higher has been the U.S. dollar, which traded about half a percent higher against a basket of currencies, as market expectations for tighter monetary policy have increased.
“Although the current March hike madness theme could uplift the Dollar higher in the short term, the visible lack of commitment to a timeline in raising US rates may swiftly cap upside gains,” said Lukman Otunuga, research analyst at FXTM, in a note.
“While the overall improving economic data and bullish sentiment towards the U.S economy could uplift the Greenback further, the ongoing Trump uncertainties and lack of clarity from the proposed fiscal policies could entice sellers to enter the scene,” he said.
In economic news, the flash read on the IHS Markit manufacturing index is due at 9:45 a.m. ET.
Overseas, European stocks rose broadly after strong economic data, with the pan-European Stoxx 600 index rising 0.33 percent. However, worries about a possible victory by Marine Le Pen in the French election remained.
The spread between 10-year French bonds and their German counterpart ticked above 81 basis points Monday, hitting its highest level in about five years. “This shows that investors have no interest in holding French bonds and they are running towards German bonds,” said Naeem Aslam, chief market analyst at Think Markets.