UKX FTSE 100 Index

By Chris Matthews and Barbara Kollmeyer, MarketWatch

Optimism remains over potential for China-U.S. trade deal

U.S. stocks saw solid gains Tuesday morning, after lawmakers reached a tentative deal to prevent a government shutdown and optimism grew over a potential trade deal between the U.S. and China.

How are major indexes faring?

The Dow Jones Industrial Average rose 240 points, or 1%, to 25,297, while the S&P 500 added 25 points, or 0.9%, to 2,735. The Nasdaq Composite Index jumped 81 points, or 1.1%, to 7,390.

Read: Morgan Stanley warns of a looming earnings recession (http://www.marketwatch.com/story/stock-market-may-be-in-for-a-rude-awakening-as-profits-dry-up-warns-strategist-2019-02-11)

What's driving the market?

Democratic and Republican lawmakers said late Monday that a deal has been reached (http://www.marketwatch.com/story/lawmakers-reach-border-security-deal-that-would-avert-shutdown-2019-02-11) to avert another damaging government shutdown. Committed to avoiding the repeat of such a scenario, GOP negotiators agreed to a border-security deal that will involve far less money for an extension of the southern U.S. border wall than President Donald Trump has been demanding.

The tentative deal, which involves 55 miles of new border fencing, still requires approval from Trump, who told a rally in El Paso, Texas that "progress is being made with this committee." He added: "Just so you know, we're building the wall anyway."

Trade negotiations entered a second day Tuesday in Beijing, with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer due to arrive Thursday for more high-level discussions. A 12:01 a.m. Eastern time March 2 deadline is looming for an agreement to be struck between the two countries.

Meanwhile, investors digested a new batch of earnings releases Tuesday, as fourth-quarter earnings season enters its final stretch.

Which stocks are worth watching?

Coty Inc. (COTY) shares were in focus Tuesday, after JAB holdings announced its plans to commence a tender offer to acquire 150 million shares of the company at a price of $11.65 per share, versus Monday's closing price of $9.66 per share. The stock is up 16.4%, early Tuesday.

Shares of Molson Coors Brewing Co. (TAP) were down 6.5% Tuesday morning, after the beer maker reported higher-than-expected, fourth-quarter earnings Tuesday morning (http://www.marketwatch.com/story/molson-coors-stock-drops-after-profit-beats-but-sales-miss-as-us-volume-fell-2019-02-12), while missing Wall Street revenue forecasts.

The company also disclosed Tuesday that it will restate its financial performance for the years ended in December 2016 and December 2017 (http://www.marketwatch.com/story/molson-coors-to-restate-results-discloses-material-weakness-in-financial-reporting-controls-2019-02-12), as those annual reports can no longer be relied on due to errors in accounting for income taxes related to deferred tax liabilities for its partnership with MillerCoors LLC

Ellie Mae Inc. (ELLI) stock was in focus after the company said it agreed to be acquired by private-equity firm Thoma Bravo in a deal worth $3.7 billion. The stock is up 21.2% Tuesday.

Under Armour Inc. (UAA) stock was down 2.6%, even after the company beat earnings and revenue estimates (http://www.marketwatch.com/story/under-armour-shares-climb-premarket-after-earnings-beat-2019-02-12) for the fourth quarter.

Shares of Gilead Sciences Inc. (GILD) were falling 4.7% early Tuesday, after the pharmaceutical company announced Monday evening that a late-stage, placebo-controlled study designed to evaluate a type of chronic liver disease drug, Selonsertib, didn't meet its desired outcome (http://www.marketwatch.com/story/gilead-stock-down-nearly-4-as-drug-trial-fizzles-2019-02-11) without worsening the patients' condition.

US Foods Holding Corp. (USFD) shares were down 4.9% Tuesday, after the company reported fourth-quarter earnings that fell short of Wall Street forecasts, though it surpassed revenue expectations.

Shares of Electronic Arts. Inc. (EA) were up 6.5% Tuesday, after the videogame publisher announced that its new game (http://www.marketwatch.com/story/electronics-art-stock-pops-after-detailing-early-apex-legends-popularity-2019-02-11), "Apex Legends," had attracted 25 million new players in its first week of availability.

Anticipated reports from TripAdvisor Inc. (TRIP) and Activision Blizzard Inc. (ATVI) are due after the market closes.

What are the analysts saying?

"The relief from avoiding another government shutdown, and speculation that something will happen with China, is helping push markets higher, though I'm surprised at this reaction, given that Trump has not yet said he'd sign the deal," Larry Benedict, chief executive of the Opportunistic Trader told MarketWatch.

"The S&P 500 is pushing up against the 2,735 resistance level that we've hit several times. There may be more on the upside, but we could also be seeing some topping action at these levels," he said.

What data and Fed speakers are in focus?

The National Federation of Independent Businesses small business index fell 3.2 points to 101.2 (https://www.nfib.com/surveys/small-business-economic-trends/), the lowest level since the weeks leading up to the 2016 presidential election, though above its historical average of 86.

The number of job openings in the U.S. reached an all-time high of 7.3 million in December, the Labor Department reported Tuesday. The share of Americans quitting there jobs held steady at 2.3%

The Federal Reserve will issue a report on household credit growth at 11 a.m.

At 12:45 p.m. Fed Chairman Jerome Powell will give a speech on rural economic policy at Mississippi Valley State University.

At 6:30 p.m. Cleveland Fed President Loretta Mester, an alternate voting member of the central bank's interest-rate setting committee, will give a speech on the economic outlook and monetary policy at Xavier University at 6:30 p.m.

Kansas City Fed President Esther George, a voting member, will give a speech on 'charting U.S. economic course' in Kansas City at 7:30 p.m.

How did the major benchmarks fare yesterday?

On Monday (http://www.marketwatch.com/story/us-stock-futures-set-for-higher-start-as-trade-talks-kick-off-china-equities-rise-2019-02-11), the Dow fell 53.22 points, or 0.2%, to 25,053.11, while the S&P 500 rose 1.92 points to 2,709.8, and the Nasdaq Composite Index gained 0.1% to 7,307.90.

How are other markets trading?

In Asia (http://www.marketwatch.com/story/asian-markets-gain-as-investors-pin-hopes-on-us-china-trade-talks-2019-02-11), the Nikkei 225 index returned from a holiday to jump 2.6%, while the Shanghai Composite rose 0.6%, and most other indexes rose. The Stoxx Europe 600 was also in positive territory, while the U.K.'s FTSE 100 edged lower (http://www.marketwatch.com/story/london-lifted-as-us-shutdown-threat-eases-tui-under-pressure-2019-02-12).

Crude oil was up, while gold is higher and the U.S. dollar is falling slightly, relative to its peers.

(END) Dow Jones Newswires

February 12, 2019 10:18 ET (15:18 GMT)

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