Wall Street Move Higher Ahead of Trump China Trade Talks

Dow Jones futures edged higher early Tuesday, along with S&P 500 futures and Nasdaq futures, ahead of a speech by President Donald Trump with investors looking for hints on China trade. The stock market rally, led by Apple stock and chipmakers, has moved to record highs on China trade optimism, despite recent mixed messages.

Homebuilder D.R. Horton (DHI) topped views before the open. Cronos Group (CRON) missed sales views early Tuesday, with rival marijuana stock Tilray (TLRY) on tap late. Apple (AAPL) chipmaker Skyworks Solutions(SWKS) reports earnings late.

Dow Jones Futures Today

Dow Jones futures rose 0.1% vs. fair value, along with S&P 500 futures. Nasdaq 100 futures climbed 0.1%. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.

Dow Jones futures may indicate where the blue-chip index opens Tuesday, but Trump's speech could drive the stock market's close.

Trump Speech On China Trade

President Trump is due to speak before the Economic Club of New York at 12 p.m. ET. Trump will likely tout unemployment at 50-year lows and the stock market at record highs. But what investors are looking for are China trade deal hints. Last week Beijing said the U.S. had agreed to tariff rollbacks as part of a “phase one” China trade deal. Trump later said there was no such agreement, but signaled he's open to some rollback as part of a China trade deal.

President Trump clearly wants a China trade deal. Is Trump willing to accept a limited China trade deal and declare victory?

The current stock market rally has rebounded sharply since early October, with the Dow Jones, S&P 500 index and Nasdaq composite all hitting highs. Much of that gain reflects hopes for a China trade deal. Despite recent conflicting statements, the Dow Jones today has been resilient. But if Trump signals that a “phase one” China trade deal will be delayed, or that new U.S. tariffs on Chinese goods will go forward, the stock market rally could quickly buckle once again.

Negative China trade news could be especially negative for Apple stock and chipmakers, which have been leading the market rally. The Apple iPhone officially is slated to face U.S. tariffs in mid-December, but investors have largely discounted that threat.

In other trade news, the Trump administration is expected to pass on imposing tariffs on European autos. Hopes for avoiding a trans-Atlantic trade war have been rising.

Marijuana Stocks

Before the open, Cronos earnings came in at 53 cents Canadian (40 cents). It's unclear if that's comparable to estimates for a loss of 3 cents a share, unchanged from a year earlier. Revenue soared to 12.7 million Canadian (about $9.586 billion), below views for $10.4 million.

After the close, Tilray losses are expected to swell to 29 cents a share as revenue soars to $49.6 million.

Cronos stock climbed 1.1% before the open in active trade. Tilray stock edged higher.

Cronos stock and Tilray stock are trading near 52-week lows. Much-larger marijuana stocks Canopy Growth (CGC) and Aurora Cannabis (ACB) report on Thursday.

Marijuana stocks have tumbled in 2019 on heavy losses and weaker-than-expected revenue growth.

D.R. Horton Earnings

D.R. Horton earnings rose to $1.35 a share in its fiscal fourth quarter as revenue grew 11% to $5.04 billion. Analysts expected D.R. Horton earnings to come in at $1.25 a share with revenue at $4.84 billion.

The homebuilder also guided higher on fiscal 2020 revenue.

With mortgage rates rebounding and some disappointing homebuilder earnings, housing stocks have pulled back in recent weeks after a strong rally. But D.R. Horton stock held up relatively well, surging back above its 50-day line Tuesday.

D.R. Horton stock climbed 3.4% to 54.46 Tuesday morning, signaling a record high.

Skyworks Earnings

Skyworks earnings for fiscal Q4 are expected to fall 23% to $1.50 a share with revenue off 18% to $825.4 million. That would be the fourth straight quarter of year-over-year declines for Skyworks earnings and sales.

Skyworks stock cleared a consolidation in late October and has risen to its best levels since July 2018.

Read more at Investor's Business Daily.

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