Dow set to attempt a run at all-time high as stock-market focus shifts from Iran to U.S.-China trade

U.S. stock indexes on Thursday appeared set to test new records as investors turned to fresh progress on a partial China trade pact, amid apparent easing of Middle East tensions.

How are benchmarks performing?

Futures for the Dow Jones Industrial Average YMH20, +0.32% were up about 100 points, or 0.3%, at 28,867, while those for the S&P 500 index ESH20, +0.29% were trading 11.80 points, or 0.4%, higher at 3,272, while Nasdaq-100 futures NQH20, +0.53% were adding 47.25 points to reach 8,991.75, a gain of 0.5%.

On Wednesday, the Dow DJIA, +0.56% ended the session up 161.41 points, or 0.6%, to 28,745.09, the S&P 500 SPX, +0.49%  gained 15.87 points, or 0.5%, to close at 3,253.05, and the Nasdaq Composite Index COMP, +0.67% finished up 60.66 points, or 0.7%, at 9,129.24.

The Nasdaq closed at an all-time high on Wednesday, while the Dow is off 0.4% from its Jan. 2 record and the S&P 500 is off 0.2% from its all-time closing high. Both the S&P and Nasdaq carved out fresh intraday records in the previous session.

Read: What stock market investors need to know about intensifying U.S.-Iran tensions

What’s driving the market?

Chinese top trade negotiator Vice Premier Liu will lead a delegation to Washington next week to sign a phase-one trade deal, the Wall Street Journal reported Thursday, citing China’s Commerce Ministry.

A partial trade agreement was expected to be signed on Jan. 15, but Beijing until Thursday had remained silent on any deal-signing ceremony, the Journal noted. Trade negotiations have been a key catalyst for market moves over more than a year because the threat rising tariff tensions between the global superpowers poses to global economic growth.

Progress on China trade talks has helped, at least momentarily, put the threat of conflict between the Washington and Tehran on the back burner after the Islamic Republic late Tuesday launched a missile strike on U.S. military bases in Iraq in apparent retaliation for the killing of one of its top generals.

Moreover, market sentiment was buoyed following remarks by President Trump, who responded to the Iranian attacks by Iran by downplaying their importance, saying that no U.S. casualties were sustained and that only ‘minimal’ damage was done to U.S. military facilities in Iraq.

“Yesterday afternoon President Trump issued a statement in relation to Iran, and he made it clear that he wasn’t pushing for an all-out war with the regime, which was a weight off traders’ minds,” wrote David Madden, market analyst at CMC Markets UK, in a daily research note.

The lack of bellicosity in Trump’s Wednesday speech helped markets that had already been breathing a sigh of relief, burst higher, following the Mideast skirmish.

“The US and Iran are still at odds with each other, but as long as a conflict doesn’t seem to be on the horizon, the feel good factor is likely to last,” the CMC analyst wrote.

Looking ahead, investors are waiting for a weekly report on jobless claims due at 8:30 a.m. Eastern Time. Meanwhile a number of members of the Federal Reserve are expected to make public appearances. At 8 a.m. Vice Chairman Richard Clarida will give remarks, Federal Reserve Bank of Minneapolis Neel Kashkari is expected to speak at 9:30 a.m., New York Fed President John Williams will appear at 11:30 a.m. and Richmond Fed President Tom Barkin and Chicago Fed President Charles Evans also slated to appear later Thursday.

Which stocks were in focus?

Macy’s Inc.’s shares M, +2.43% were in focus after the retailer said it plans to shut nearly 30 locations after its sales fell during the holiday months.

Uber Technologies UBER, +3.41% says it recalibrated some fares in California to give drivers a way to earn more.

Bed Bath & Beyond BBBY, -1.13% reported a quarterly loss tied to weaker sales during the holiday period.

Boeing Co.’s shares BA, -1.75% remain in focus after reports showed that a 737 airplane—not the was already on fire before crashing in Iran, en route to Kyiv, Ukraine, killing all 167 passengers and nine crew members on board. Iran has so far refused to provide a black box that was retrieved after the crash to aviation investigators.

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