Stock Futures Rise on Hopes of 'Fiscal Cliff' Deal
NEW YORK ( TheStreet) -- Stock futures were pointing to a stronger open on Wall Street Tuesday amid growing anticipation that a deal to avert the "fiscal cliff" will be achieved and ahead of data that's expected to offer more signs of improvement in the housing market.
Expectations for a budget resolution continued to build as President Barack Obama on Monday night approached the Republicans with a counter-offer that included substantially lowering his demand for higher taxes on wealthy Americans.
Obama proposed to increase taxes on American households with incomes exceeding $400,000; the president previously had persistently demanded raising taxes on households with incomes above $250,000.
House Speaker Boehner and House Majority Leader Eric Cantor on Tuesday are reportedly expected to provide House Republicans with the latest on the talks.
Futures for the Dow Jones Industrial Average were rising 28 points, or 52.61 points above fair value, to 13,212. Futures for the S&P 500 were up 3.25 points, or 6.59 above fair value, at 1430. Futures for the Nasdaq were rising 10.25 points, or 13.79 points above fair value, at 2672.
"U.S. fiscal cliff negotiations are continuing to move towards their conclusion. Why are we waiting? Why, indeed," remarked Paul Donovan, global economist at UBS. "Boehner and Obama met again yesterday. Perhaps more importantly, Senate leader Harry Reid threatened to call the Senate back to work on 26 December. That should get things moving."
Major U.S. equity averages heated up Monday as investors cheered signs that Washington officials were making noteworthy progress in their efforts to try to reach a budget deal.
The Commerce Department Tuesday is expected by economists to report a third-quarter current account deficit of $103.4 billion, compared with a deficit of $117.4 billion in the second quarter. The report is due at 8:30 a.m. EST.
At 10 a.m., the National Association of Home Builders is predicted to say that its Housing Market Index showed that homebuilder confidence in December ticked up to 47 from 46, pushing closer to the 50 mark, the point at which an equal number of builders view sales conditions as good versus poor.
Michael PeQueen, managing director and partner at HighTower, said that while he is closely watching several fundamental improvements in the U.S. economy such as the nascent housing recovery and recent employment gains, the single biggest driver of risk appetite in 2013 will be the extraordinarily accommodative monetary policy of global central banks.
PeQueen pointed to the Federal Reserve engaging in "QE-infinity;" the European Central Bank giving ECB President Mario Draghi the votes to lower rates; and Japan just electing with a super-majority the Liberal Democratic Party that campaigned on a policy of aggressively expanding the monetary base to fight deflation.