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Top 5 Things to Know in the Market on Tuesday

Investing.com - Here are the top five things you need to know in financial markets on Tuesday, August 20:

1. U.S. futures steady in waiting game

U.S. futures registered timid gains on Tuesday as traders waited for new developments in the Sino-U.S. trade impasse as well as a highly-anticipated appearance from Fed Chairman Jerome Powell at the end of the week.

There were few developments on the trade front although Chinese telecom giant Huawei spoke out against a decision to add more of the company’s affiliates to a blacklist.

Although Washington granted a 90-day reprieve for U.S. companies to continue dealing with Huawei on Monday, it also added 46 of the company’s affiliates to the “Entity List” which restricts them from doing business with U.S. companies.

Asian stocks ended the session higher on the back of Monday’s rally on Wall Street, but European stocks showed caution amid political uncertainties. Italian shares led losses ahead of an appearance of its prime minister, Giuseppe Conte, scheduled for 9:00 AM ET (13:00 GMT). Media speculation suggested that Conte will resign rather than face a no confidence vote called, unusually, by one of the government parties.

Read more: Fear of Recession Is Hurting Bank Stocks; Time to Take Advantage? - Haris Anwar

2. More U.S. tax cuts?

Senior White House officials may be discussing the possibility of a temporary cut to the payroll tax as a means to boost the economy, according to a report from The Washington Post that cited three people familiar with discussions.

However, a White House official told Reuters that while further tax cuts are certainly on the table, a cut to payroll taxes was not something currently under discussion.

The possibility of tax cuts comes as investors worry over the impact of the ongoing U.S.-China trade conflict, cited by many as a reason for the U.S. economy's slowdown in the second quarter.

3. Home Depot in earnings spotlight

Home Depot (NYSE:HD) will report earnings ahead of the opening bell with analysts speculating as to the impact of tariffs, which have increased raw materials costs such as lumber, weighing that against supportive factors such as lower mortgage rates and a strong labor market.

Guidance from the world’s largest home improvement retailer will also be a key factor after its previous outlook missed expectations.

Kohl's (NYSE:KSS), Medtronic (NYSE:MDT) and TJX (NYSE:TJX) will also release earnings ahead of the open, while Urban Outfitters (NASDAQ:URBN) and Toll Brothers (NYSE:TOL) report after the close.

4. Fed officials to prep markets for minutes, Powell

Federal Reserve policymakers Randall Quarles and Mary Daly are scheduled for appearances as markets look for signs that the U.S. central bank will move forward with a widely-anticipated rate cut at its upcoming meeting in September.

Boston Fed President Eric Rosengren pushed back against expectations, saying on Monday that he wanted more evidence of an economic slowdown before he would be willing to back a cut. Rosengren was one of two policymakers that voted against the 25 basis point cut in July.

Quarles and Daly will speak ahead of the minutes of the last policy meeting scheduled for release Wednesday and Powell’s scheduled speech at Jackson Hole on Friday.

5. Oil rides buying inertia on stimulus hopes ahead of API

Crude traded higher for a third straight day with the rally attributed to expectations of central bank stimulus across the globe to stop a global recession that would depress demand for oil.

Traders will turn their attention later to U.S. crude stockpiles as the American Petroleum Institute releases its weekly report amid expectations for a draw of 1.89 million barrels. Prices tumbled after last week’s data from the Energy Information Administration showed a surprise build.

-- Reuters contributed to this report.

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