U.S. stock futures rose Tuesday, as another big merger was announced and the S&P 500 poised for another run at the 2000 level.
Dow Jones Industrial Average futures gained 28 points, or 0.2%, to 17084. S&P 500 index futures added three points, or 0.2%, to 1998 and Nasdaq-100 futures rose eight points, or 0.2%, to 4071. Changes in stock futures don't always accurately predict stock moves after the opening bell.
Burger King Worldwide Inc. BKW +19.51% and Canadian coffee-and-doughnut chain Tim Hortons Inc. THI.T +19.26% announced a major corporate merger Tuesday morning, as had been expected. Shares of Burger King rose 3.2% and shares of Tim Hortons rose 11% in premarket trading.
Stocks rose Monday, with the S&P 500 pushing above 2000 for the first time in intraday trading. While the index failed to close above that milestone, it rose to its 29th record of the year with a gain of 0.5% to 1997.92. The Dow advanced 0.4% to 17076.87.
The S&P 500 has completely recovered from the mid-July pullback in stocks caused in part by a sharp escalation of geopolitical tensions in Ukraine and the Middle East. The Dow is close behind, hovering just 0.4% below its July 16 record. Stocks have pushed higher this year as a low-interest rate environment and evidence of an economic recovery increase the appeal of stocks.
Deal activity among companies and the second-quarter earnings season are bullish signs for equities, said Monica DiCenso, U.S. head of equity strategy at J.P. Morgan Private Bank. This week, news broke about the Burger King-Tim Hortons talks and Amazon.com Inc. AMZN +0.73% 's acquisition of Twitch Interactive Inc., which is an Internet video channel for broadcasting.
"When you see fundamentals like that—earnings growth accelerating, leverage very low on corporate balance sheets, the fact that companies are finally willing to deploy that capital especially through M&A—that's a big deal," she said. "That's a sign of confidence."
Remarks made by top central bankers at annual gathering in Jackson Hole, Wyo. last week continued to attract attention on Tuesday. Federal Reserve Chairwoman Janet Yellen gave little indication of when the central bank could raise short-term interest rates, which have remained near zero since December 2008. At the same time, European Central Bank President Mario Draghi's remarks suggested willingness for more aggressive action to jump-start the euro zone's recovery.
European markets rose, with the Stoxx Europe 600 up 0.4%.
On Tuesday, a data report is expected to show a 7.5% increase in durable-goods orders for July. Later in the morning, investors will get a reading on home prices in June and consumer confidence in August.
The yield on the 10-year Treasury note was flat at 2.381%, according to FactSet. Treasury yields move inversely with prices.
Billionaire investor Warren Buffett is helping finance the Burger King takeover of the Canadian chain Tim Hortons Inc., The Wall Street Journal reported. The deal would move the new company's headquarters to Canada in a so-called tax inversion.
Best Buy Co. reported a stronger-than-expected profit in the second quarter, but sales continued to decline. Shares fell 3.8% premarket.
Amazon.com Inc. said Monday it agreed to acquire Twitch Interactive Inc. for about $970 million in cash. Amazon shares rose 0.7% premarket.
In commodity markets, crude-oil futures rose 0.3% to $93.62 a barrel. Gold futures gained 0.7% to $1,288.20 an ounce.
