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U.S. Stocks May See Initial Strength Amid Optimism About Stimulus Bill

wallstreet1 up 032918 24mar20 lt

After moving significantly lower over the two previous sessions, stocks may regain some ground 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 801 points.

Traders may look to pick up stocks at reduced levels amid indications Democrats and Republicans are close to an agreement on a massive fiscal stimulus bill.

Treasury Secretary Steve Mnuchin and Senate Minority Leader Chuck Schumer, D-N.Y., both expressed optimism a deal on a nearly $2 trillion stimulus package would be reached today.

"We expect to have an agreement tomorrow morning," Schumer told reporters after meeting with Mnuchin last night. "There's still a few little differences. Neither of us think they're in any way going to get in the way of a final agreement."

The optimism about a potential agreement comes even though the stimulus bill failed to clear a key procedural hurdle in the Senate for two straight days amid opposition from Democrats.

Most Democratic Senators voted against advancing the bill amid complaints that the legislation does too much to bail out companies and not enough to provide assistance to workers.

Positive sentiment may also be generated in reaction to President Donald Trump's comments suggesting the coronavirus-related shutdown of much of the country could end sooner than many anticipated.

"America will again and soon be open for business. Very soon," Trump said at a news conference on Monday. "A lot sooner than three or four months."

Trump's remarks represent a sharp contrast to his comments just last week indicating the coronavirus pandemic would not be under control until July or August.

The president's eagerness to get the economy back up and running may also lead to conflict with public health officials, who are likely to continue to call for social distancing.

Shortly after the start of trading, The Commerce Department is due to release its report on new home sales in the month of February.

New home sales are expected to drop to an annual rate of 750,000 in February after jumping to a rate of 764,000 in January.

After coming under pressure early in the session, stocks fluctuated over the course of the trading day on Monday but largely remained firmly negative before closing notably lower.

With the continued drop on the day, the Dow and the S&P 500 tumbled to new three-year closing lows and the Nasdaq ended the session at its lowest closing level in over a year.

The major averages all closed in negative territory, although the Nasdaq posted a relatively modest loss. While the Nasdaq fell 18.84 points or 0.3 percent to 6,860.67, the Dow plunged 582.05 points or 3 percent to 18,591.93 and the S&P 500 plummeted 67.52 points or 2.9 percent to 2,237.40.

In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Tuesday. Japan's Nikkei 225 Index soared by 7.1 percent, while Hong Kong's Hang Seng Index surged up by 4.5 percent.

The major European markets have also shown strong moves to the upside on the day. While the German DAX Index has spiked by 6 percent, the French CAC 40 Index is up by 4.1 percent and the U.K.'s FTSE 100 Index is up by 3.9 percent.

In commodities trading, crude oil futures are rising $0.52 to $23.88 a barrel after climbing $0.73 to $23.36 a barrel on Monday. Meanwhile, after skyrocketing $83 to $1,567.60 an ounce in the previous session, gold futures are soaring $96.30 to $1,663.90 an ounce.

On the currency front, the U.S. dollar is trading at 110.80 yen compared to the 111.23 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0828 compared to yesterday's $1.0726.

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