U.S. stock futures are headed higher Tuesday after President Barack Obama announced an agreement with Republicans Monday night to extend the Bush-era tax cuts for two years, while also renewing unemployment benefits and granting a one-year reduction in Social Security taxes.
The deal still requires Congressional approval. Yet it gives investors encouragement, since tax cuts were set to expire at the end of the year.
“It’s something that clearly is going to put some confidence back in corporate America,” said Art Hogan, chief market strategist at Jefferies & Co. “It’s a real positive.”
Ahead of the opening bell, Dow Jones industrial average futures are up 83, or 0.7 percent, to 11,436. Standard and Poor’s 500 index futures are up 11, or 0.9 percent, to 1,233. Nasdaq 100 futures are up 18, or 0.8 percent, to 2,209.
But Treasury prices plummetted as investors moved into riskier assets. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.03 percent from 2.93 percent late Monday.
Investors were also encouraged by news out of Europe. European stock markets rose after finance ministers from the 16 nations that make up the euro did not rule out increasing their $1 trillion bailout fund in the future, if needed.
Ireland was also expected to pass a budget to reduce its deficit.
In midday trading in Europe, Britain’s FTSE 100 rose 1.3 percent, while Germany’s DAX rose 1.1 percent. France’s CAC-40 rose 2.1 percent.
Asian indexes closed mostly higher. Hong Kong’s Hang Seng Index rose 0.8 percent and China’s Shanghai Composite index rose 0.7 percent. Japan’s Nikkei 225 stock average fell 0.3 percent.
In the U.S., investors will get reports today on job openings and unemployment in the nation’s largest metropolitan areas. Most analysts, however, say they’re waiting for Thursday’s report on initial claims for unemployment benefits to get a better read on the jobs market.
The government will also release information on consumer credit. Economists are forecasting no change in the rate at which Americans borrowed in October, which shows that consumers are still showing restraint in using their credit cards.
In corporate news, H&R Block Inc., the nation’s largest tax preparer, reports its fiscal second-quarter results after the stock market closes.
Investors will also be watching 3M’s stock. The maker of everything from Post-Its to respirators issued an upbeat profit outlook for next year. The company expects adjusted earnings to grow 10 percent to 14 percent in 2011 over its predicted profit for 2010. 3M shares rose 34 cents, or 0.4 percent, to $87.22 in pre-market trading.
Meanwhile, the dollar fell 0.3 percent against an index of six other currencies.