US stock market set to nudge higher refuting trade concern with China

U.S. stock market was set to open slightly higher on Tuesday, stabilizing after a slide a day earlier driven by concerns that the fallout from the U.S.-China trade dispute could be set to dominate the corporate earnings season and weaken profits. Initial releases in a bumper day of results showed Xerox Corp rising 5.9 per cent in premarket trading and 3M Co gaining 2.8 per cent after the companies beat profit estimates, while Pfizer Inc fell 3.4 per cent.

Wall Street sold off on Monday after Caterpillar Inc and Nvidia Corp joined a growing list of companies to blame a slowdown in China for grim forecasts. Whirlpool Corp, another major China-linked business, dropped 6.2 per cent after the home appliances maker warned of a higher tax bill, costs and a strong dollar hitting its 2019 profit and revenue.

In a potential setback to the progress in U.S-China trade talks, the U.S. Justice Department levelled charges against China's telecom giant Huawei days before a high-level meeting between the two countries in Washington, aimed to tackle a prolonged tariff war that has roiled financial markets. "Huawei is a competitor and a supplier to U.S. companies, so any negative impact can be felt on a broader spectrum," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

"But the fact that there are discussions on trade is viewed as a positive. Investors are expecting positive comments because the (Trump) administration has been cheerleading the market and want markets to move higher." Although earnings have largely surpassed Wall Street's expectations, helping the S&P 500 climb about 12 per cent from its December lows, worries about slowing global growth have tempered expectations.

Since the reporting season began two weeks ago, analysts' estimates for fourth-quarter profit growth have stayed steady at about 14 per cent, but expectations for 2019 earnings growth have dropped to 5.6 per cent from 6.3 per cent, according to IBES data from Refinitiv. At 8:37 a.m. ET, Dow e-minis were up 65 points, or 0.27 per cent. S&P 500 e-minis were up 3.75 points, or 0.14 per cent and Nasdaq 100 e-minis were up 15.25 points, or 0.23 per cent.

The Federal Reserve begins a two-day monetary policy meeting on Tuesday. After raising rates gradually last year, the central bank is taking a wait-and-see approach to further tightening in the face of an overseas slowdown and market volatility. Joining Pfizer Inc in forecasting a downbeat 2019 revenue, Allergan Plc said competition for its eye drug Restasis could hurt profits, sending its shares down 4.2 per cent.

Harley-Davidson Inc shares plunged about 9 per cent after the motorcycle maker reported a lower-than-expected quarterly profit, hit by declining sales in the United States. Verizon Communications Inc dipped 3.3 per cent after the largest U.S. wireless carrier missed quarterly revenue estimates.