Wall street set to open for mild gains as trade deal with China nears

Wall Street was set to open slightly higher on Tuesday, a day after the Dow Jones Industrial Average and the S&P 500 posted their biggest drop in nearly a month, as investors awaited fresh developments on the U.S.-China trade talks. U.S. Secretary of State Mike Pompeo said in a media interview that President Donald Trump will reject any trade deal that is not perfect, but added that the United States will still keep working on an agreement.

Reports that Washington and Beijing could close in on a deal as early as March end had initially lifted Wall Street on Monday, but the rally fizzled out and the indexes closed much lower, in part due to weak December construction spending data.

The benchmark index, which closed last week above the significant 2,800-point mark for the first time since Nov.8, failed to hold on to that level in the previous session. "Investors are trying to get sense of whether the selloff from yesterday will continue or if it is a one-day event," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.

"Futures are going back-and-forth, it's hard to put a finger on it as there is no news out yet. I think people are concerned about what happens when a trade deal gets announced." Hopes that the world's two largest economies would soon hammer out a solution to end their trade dispute has been a huge driving force for the market's rally this year, along with the dovish stance of the Federal Reserve on future rate hikes.

The S&P 500 has climbed about 11 per cent in 2019 and is now about 5 per cent away from its Sept.20 record closing high. At 8:33 a.m. ET, Dow e-minis were up 20 points, or 0.08 per cent. S&P 500 e-minis were up 3.25 points, or 0.12 per cent and Nasdaq 100 e-minis were up 8.75 points, or 0.12 per cent.

Among stocks, Target Corp jumped 6.3 per cent in premarket trading, while Kohl's Corp gained 5.5 per cent after both retailers forecast annual earnings above estimates. Ctrip.com International climbed 12 per cent after the Chinese travel website beat quarterly revenue, helped by international hotel and air businesses and strength in Skyscanner's direct booking program.

The Institute of Supply Management's report on non-manufacturing activity is expected to show a reading of 57.3 in February, up from a reading of 56.7 in January at 10:00 a.m. ET. Separately, the Commerce Department's data is likely to show that new home sales fell to a seasonally adjusted rate of 600,000 units in December from 657,000 units a month earlier.