Nasdaq Futures Rise As Traders Pin Hopes On US-China Trade Truce: Strategist Braces For Tamer May Inflation Data

The Nasdaq 100 futures led the way as the major stock futures were uniformly higher in overnight trading. The spotlight will likely be on the ongoing trade talks between the U.S. and China in London.

Although no breakthrough was clinched on Monday, a U.S. official reportedly confirmed that the talks will continue on Tuesday.

As of 11:11 p.m. ET on Monday, the Nasdaq 100 and the Russell 2000 futures climbed about 0.60%, while the S & P 500 and rose about 0.50%. The Dow futures added a more modest 0.36%.

The benchmark U.S. 10-year Treasury note yield was slightly higher but held under the 4.5% level. Among commodities, crude oil futures continued to head northward and traded above $65.50 a barrel in the Asian session, while gold futures fell.

The greenback was firmer against most major currencies as the U.S. economy remained resilient despite the tariff turbulence.

The major Asian markets all traded higher on Tuesday as risk appetite perked up in hopes of resolving the U.S.-China trade standoff.

On the economic calendar, the National Federation of Independent Business (NIFB) Small Business Optimism Index for May is due at 6 a.m. ET. The index is expected to rise to 96 from 95.8 in the previous month. 

J.M. Smucker (SJM), United Natural Foods (UNFI), GameStop (GME), GitLab (GTLB) and Stitch Fix (SFIX) are among the notable companies due to report on Tuesday.

WisdomTree Senior Economist Jeremy Siegel said that with more aggressive tariff measures off the table, the equity rally is back to focusing on a forward earnings outlook driven by artificial intelligence (AI).

While stating that the upcoming May consumer price inflation report could add another piece to the policy puzzle, the economist said he does not expect much of the pricing pressure from recent tariff activity to appear until later this summer due to lagging inventory effects.

Siegel also expects the Federal Reserve to stand pat when it meets next week following May's surprisingly strong jobs report, provided the inflation does not surprise to the upside. 

“Looking ahead, the S & P 500 all-time highs are likely in the absence of major trade shocks,” he added.

On Monday, stocks, while experiencing volatility, closed on a lackluster note as consumer discretionary, material, and IT stocks helped offset weakness in most other S & P 500 sector classes. Tesla (TSLA) jumped 4.5% amid signs of thaw in the frosty relationship between President Donald Trump and Elon Musk.

Traders took stock of the commencement of the second round of the U.S.-China trade talks.

The Invesco QQQ Trust (QQQ) ETF and the SPDR S & P 500 ETF (SPY) added 0.15% and 0.09%, respectively.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) edged up 0.04%, while the iShares Russell 2000 ETF (IWM) gained 0.69%.

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