Futures Rise After Tax Cut Compromise
U.S. stock index futures rose decisively Tuesday after President Barack Obama gave his support to an initial compromise over Bush-era tax cuts and an extension to unemployment benefits.
The tax cuts, left over from when George W. Bush was president, will be extended for two years after Obama announced the framework agreement with Republicans. Obama and Congressional Republicans also worked out a plan to cut payroll taxes.
Dow futures were up about 3/4 of a percent, while S&P 500 futures were up nearly 1 percent, a day after shares closed closed mixed with technology stocks giving a boost to the Nasdaq. Nasdaq 100 futures were up more than 1 percent Tuesday.
"Any agreement that's reached in this way will be welcomed by the market," Will Hedden, sales trader at IG Index, told CNBC.com referring to the tax compromise.
The high prices of oil and gold are also helping to boost the futures because they are supporting the sectors' heavyweight stocks, according to Hedden.
Concerns over the euro zone debt crisis have taken a back seat, which is also helping futures, he said.
European shares were higher across the board as European Union finance ministers meet Tuesday to discuss the ongoing debt problems. A meeting of the 16 euro zone finance ministers Monday gave no new steps to stem the region's debt crisis.
Asian stocks ended mostly in the green, but Japanese indexes closed lower.
On the U.S. economic front, October consumer credit data will be released at 3 p.m., with economists calling for a deficit of $2.5 billion.
The U.S. Treasury will auction three-year Treasury notes at 1 p.m.
3M shares were up slightly after the diversified manufacturer said it expects its adjusted earnings to grow 10 to 14 percent next year above what it expects to earn in 2010.Specifically, 3M expects earnings will be between $6.17 and 6.37 a share in 2011, excluding 27 cents a share in pension costs, while sales are projected to be between $29 billion and $30.5 billion. 3M was expected to earn $6.20 a share on revenue of $29.15 billion.
Talbots shares sank more than 20 percent premarket trading after the women's clothing retailer cut its full-year forecast, and said it would further cut prices. Talbots expects full-year profits of 70 cents to 78 cents per share, compared with an October forecast of 84 cents to 92 cents per share.
Shares of Citigroup rose after theU.S. government sold off its last shares in the bank for $4.35 each. The sales means the end of the government's ownership of the banking giant, resulting in a $12 billion gain for taxpayers.
On Tap This Week:
TUESDAY: Bank of Canada announcement, IBD/TIPP economic optimism index, three-year Treasury note auction, consumer credit, API weekly report, Ireland budget announcement, 3M investor meeting; after-the-bell earnings from H&R Block and Novellus.
WEDNESDAY: McDonald's November sales, MBA mortgage applications, quarterly services survey, 10-year Treasury note auction; before-the-bell earnings from United Natural Foods.
THURSDAY: BOE announcement, jobless claims, wholesale inventories, 30-year Treasury bond auction, DuPont investor day; before-the-bell earnings from Costco and Lululemon Athletica; after-the-bell earnings from National Semi.
FRIDAY: International trade, import and export prices, consumer sentiment, and Treasury budget.
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