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Futures for the Dow Jones industrial average, S&P 500 index and Nasdaq 100 futures pointed higher Thursday night after the major market averages rallied on revived hopes for tax cuts and other parts of President Trump’s agenda.
Dow industrials futures rose 0.1% above fair value. So did S&P 500 index and Nasdaq 100 futures.
Dow and S&P 500 component Visa (V) looks poised to open at a new high Friday after topping earnings views late Thursday. General Electric (GE), another member of those two big-cap gauges, is on tap with earnings Friday morning. Meanwhile, three other Dow stocks: Boeing (BA), Home Depot (HD) and Microsoft (MSFT) have been trading tightly, finding support at 10-week lines and near buy points.
Trump Rally Revived
The Nasdaq composite and Dow Jones industrial average rallied 0.9% while the S&P 500 climbed 0.8%. The small-cap S&P 600 jumped 1.4%.
Treasury Secretary Steve Mnuchin said Thursday that tax reform will happen “very soon,” days after downplaying the odds. He said that the “majority” of paying for tax cuts would come from faster economic growth boosting revenues, suggesting a border-adjustment tax may not happen. He also added that Trump’s fiscal 2018 budget plan will include $200 billion for infrastructure, saying that will be leveraged with other funding to boost infrastructure by Trump’s $1 trillion pledge.
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Trump himself signed an order to probe steel imports with an eye to possibly imposing new curbs to support the domestic industry. Steel stocks, also benefiting from solid earnings outlooks, were the day’s top-performing group by far.
Stocks surged after the presidential election as revived business and investor “animal spirits” on hopes that Trump’s agenda would boost economic growth. But with the president’s policies hitting resistance, stocks have struggled, especially “Trump plays” such as steel, construction and financial stocks.
The question, once again, is whether Trump will be able to push through his agenda.
Visa reported a second-straight quarter of earnings and revenue growth above 20%, topping forecasts. Visa also gave bullish guidance. The payment processing giant rose more than 2% in late trade, suggesting the stock will top 92.05 high set on March 20. Visa’s current consolidation is too short for a proper buy point.
General Electric is expected to report declining earnings and sales for the first quarter, with core industrial orders also in focus. GE shares rallied Thursday, but found resistance at their 200-day line.
Boeing, like many other defense and aerospace firms, is one Trump sector that has continued to perform well. Investors are betting that defense spending will rise under Trump. After a strong post-election rally, Boeing has consolidated in a flat base, finding support recently at its 50-day line for the first time in six months. Shares edged up to 179.30 on Thursday, not far from a 185.81 buy point.
Boeing’s relative price strength line has been holding at highs, a bullish sign.
Home Depot has benefited from an improving housing and remodeling market, as job and wage growth fuel demand. Earnings growth has been accelerating.
Home Depot shares have formed a bullish four-weeks tight pattern, with a potential buy point of 151.20. Shares closed Thursday at 148.72.
The stock’s RS line is near its best levels in more than eight months, as Home Depot has been outperforming the S&P 500 for some time.
The Windows/Office software giant is rapidly becoming a major cloud-computing player. That transition is still ongoing, but revenue growth has started to turn higher.
Microsoft has a 66.01 flat-base buy point. The software maker briefly topped that entry in late March and early April, but pulled. Shares have found support along the 50-day line for several weeks, closing Thursday at 65.50.
Microsoft’s RS line has been moving sideways for the past six months, less impressive than Boeing and Home Depot. Also, the stock’s Accumulation/Distribution Rating is a D+, suggesting big institutions have been shedding shares rather than adding to positions.
Asian markets generally rallied Friday morning, with Japan’s Nikkei up 0.8%, Hong Kong’s Hang Seng 0.3% and China’s Shanghai composite 0.2%.