What are the major benchmarks doingThe Dow Jones Industrial Average DJIA, +0.30% rose 42 points to 25,800, a gain of 0.2%. The S&P 500 index SPX, +0.35% were up 6 points to 2,863, a rise of 0.2%, while the Nasdaq Composite Index COMP, +0.45% rose 24 points to 7,848, a move of 0.4%.
Equities have trended higher of late. All three major indexes have risen for three straight sessions; on Monday, the Dowgained 0.4% while the S&P was up 0.2% and the Nasdaq rose 0.1%, with positive sentiment boosted by a pair of multibillion-dollar deals.
At current levels, the S&P is less than 0.4% below all-time highs while the Nasdaq is about 1% below its record. The Dow is 3% under is own, but it is very close to exiting a correction it has been mired in since February.
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What’s driving the market?With the second-quarter earnings season essentially over and no economic data on tap, investors are turning their attention to upcoming news from the Federal Reserve. The minutes from the central bank’s latest meeting will be released on Wednesday, and on Friday, Fed Chairman Jerome Powell will give a speech at the Fed’s annual summer retreat in Jackson Hole.
Both the minutes and the speech will be scoured for any insight into what the Fed sees as potential problem spots for the economy—in particular, market participants will be looking to hear Powell’s thoughts on trade policy and whether the currency crisis in Turkey could spread to other emerging markets or regions—as well as for any clues into the Fed’s policy plans on interest rates.
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The speech could take on political overtones this year, after multiple media outlets on Monday reported that President Donald Trump had criticized Powell. Trump said he was “not thrilled” with the Fed chairman, who he had appointed to replace Janet Yellen, and that he expected “more help” from the central bank. Reuters reported that Trump said he would continue criticizing the Fed should it continue to raise short-term interest rates, which the central bank has indicated it will do at a steady clip.
This isn’t the first time Trump has called out the Fed for raising rates. When he did so in July, Powell stressed that the Fed operated independently of political considerations.
Separately, investors are continuing to monitor trade relations between the U.S. and its major trading partners, with talks between the U.S. and China set to resume on Wednesday. While market participants are optimistic that progress could be made in the talks—potentially avoiding a potential trade war, which most analysts said would be a massive headwind for global economic growth—few expect the issue to be resolved.
On Monday, President Donald Trump told Reuters that he has “no time frame” for ending the trade dispute, and that he didn’t “expect much” from the talks. His administration is also moving forward with tariffs that cover $200 billion in Chinese goods.
What are market analysts saying?“Should the two sides manage to broker a truce we would expect risk sentiment to lift dramatically, catapulting the markets higher,” wrote Jasper Lawler, head of research at the London Capital Group. “Let’s not forget that the trade war story has been weighing on stocks, pressuring equities for the last few months so any signs that the risk is moderating on a serious scale will boost investors’ appetite for riskier assets and push equity indices higher.”
Speaking about Trump’s comments against Powell, Lawler wrote: “Trump could be sowing the seed for market perception problems later down the line. For example, should the stronger dollar result in weaker economic data moving towards December and the Fed decides not to hike. The market could question whether the Fed opted not to hike on the basis of data or to appease Trump? So, while Trump won’t influence the path of rate increases, his comments could impact on market’s perception of what is happening, which is an equally dangerous game to be playing.”
What stocks are in focus?Toll Brothers Inc. TOL, +11.37% rose 12% after it reported its third-quarter results and gave a full-year sales outlook.
Coty Inc. COTY, -8.51% fell 6% in premarket trading after it reported fourth-quarter revenue that missed expectations, although its adjusted profits topped forecasts by a penny per share.
Medtronic PLC MDT, +4.31% gained 4.3% before the bell. The medical device company posted first-quarter earnings and revenue that beat expectations. It also raised its organic full-year revenue outlook.
Kohl’s Corp. KSS, -3.53% reported adjusted second-quarter earnings that beat expectations, along with revenue that was ahead of forecasts. It also raised its full-year adjusted profit view. The stock fell 2.5% in early trade.
J.M. Smucker SJM, -3.03% reported adjust first-quarter earnings that beat expectations. Shares of the company were off 0.4%.
After the market closes, Urban Outfitters Inc. URBN, -0.44% and Red Robin Gourmet Burgers Inc. RRGB, -1.01% are expected to report. Urban Outfitters shares were up 0.7%, while those for Red Robin showed a slight rise of 0.5%.