By Barbara Kollmeyer, MarketWatch

China to reduce import duties on passenger cars

The Dow industrials was poised to move further atop the 25,000 level on Tuesday, as the dollar pulled back and trade tensions between the U.S. and China showed further signs of easing.

Read: Meet 'green gold' -- and the stock for betting on it (http://www.marketwatch.com/story/meet-green-gold-and-the-stock-for-betting-on-it-2018-05-22)

What are markets doing?

Dow Jones Industrial Average futures rose 50 points, or 0.2%, to 25,052, while S&P 500 index futures rose 24 points, or 0.4%, to 6,939.50. Nasdaq-100 futures gained 24 points, or 0.4%, to 6,939.75.

On Monday (http://www.marketwatch.com/story/dow-futures-rise-200-points-as-china-trade-truce-fuels-fresh-optimism-2018-05-21), the Dow Jones Industrial Average soared 298.20 points, or 1.2%, to 25,013.29, for its highest close since March 12 (http://www.marketwatch.com/story/us-stocks-on-track-to-close-at-two-month-high-2018-05-21). The S&P 500 rose 0.7% to 2,733.01, its best finish since mid March, while the Nasdaq Composite Index rose 0.5% to 7,394.04.

The small-cap benchmark Russell 2000 index rose 0.7% after scoring its latest in a series of records on Monday (http://www.marketwatch.com/story/russell-2000-hits-record-in-early-trading-2018-05-21).

Opinion: Here's what the Russell 2000's new high means for the S&P 500 (http://www.marketwatch.com/story/heres-what-the-russell-2000s-new-high-means-for-the-sp-500-2018-05-22)

Read:The strong dollar is a stock-market drag and poses a threat to earnings growth (http://www.marketwatch.com/story/the-strong-dollar-is-a-stock-market-drag-and-poses-a-threat-to-earnings-growth-2018-05-19)

What's driving the market?

The dollar was continuing to retrace gains on Tuesday, while the 10-year U.S. Treasury note yield was hovering around 3.07% after touching a seven-year intraday high of 3.126% on Friday (http://www.marketwatch.com/story/government-bonds-rally-as-geopolitics-reignite-buying-10-year-retreats-from-310-2018-05-18). (http://www.marketwatch.com/story/government-bonds-rally-as-geopolitics-reignite-buying-10-year-retreats-from-310-2018-05-18) (http://www.marketwatch.com/story/government-bonds-rally-as-geopolitics-reignite-buying-10-year-retreats-from-310-2018-05-18) Higher yields as well as a strong dollar can make stocks less attractive to investors.

With no major economic data or Federal Reserve speakers on the calendar for Tuesday, investors may focus on easing trade tensions between the U.S. and China, which lifted the stock market at the start of the week.

The Chinese government said Tuesday that it will cut import duties on passenger cars as of July 1 to 15% from the current 25%. Ford Motor Co.(F) rose 1% in premarket. And the U.S. and China are also reportedly nearing a deal to settle a controversy over Chinese telecom group ZTE Corp. (http://www.marketwatch.com/story/us-china-near-deal-that-would-ease-off-zte-ban-2018-05-21)

Other geopolitical tensions may hover in the background, with uncertainty over a historic meeting between U.S. President Donald Trump and North Korea's dictator Kim Jong Un. Vice President Mike Pence warned in an interview late Monday that North Korea cannot "play" Trump (http://www.marketwatch.com/story/north-korea-cannot-play-president-trump-warns-pence-2018-05-22) (http://www.marketwatch.com/story/north-korea-cannot-play-president-trump-warns-pence-2018-05-22) where nuclear disarmament is concerned.

Meanwhile, rising oil prices may stay on investors' minds, amid worries about the effect they could have on inflation and stock prices (http://www.marketwatch.com/story/heres-what-surging-oil-prices-mean-for-the-stock-market-2018-05-18). Analysts say global oil prices will remain elevated as long as the market thinks sanctions could be imposed on Venezuela and Iran.

Opinion:The increase in oil prices is just beginning (http://www.marketwatch.com/story/the-increase-in-oil-prices-is-just-beginning-2018-05-21)

Laying out new demands for Iran on Monday (http://www.marketwatch.com/story/pompeo-lays-out-trump-administrations-demands-for-new-iran-deal-2018-05-21), the White House said any new nuclear deal with the U.S. would require Iran to stop enriching uranium and to pull its support for militant groups in the Middle East. The demands were met by immediate rejection from Iran.

Economic preview:Rising rates, higher gas have failed to kill the economic expansion (http://www.marketwatch.com/story/us-economy-charts-steady-course-despite-stronger-headwinds-2018-05-18)

What are strategists saying?

Further signs of improving trade relations between the U.S. and China should give stocks a boost Tuesday, said Peter Cardillo, chief market economist at Spartan Capital. "The news is fueling investors enthusiasm that an expanding trade war will be averted," he said, in a note to clients. "We expect an extensions of yesterday's 'trade rally,' although at a less vivacious pace."

"Asian equities didn't enjoy the same excitement in Wall Street as optimism over easing tensions faded, meaning that Asian investors are likely to become more worried about oil trading at $80. The first response to Nicolás Maduro's victory in Sunday's Venezuelan elections was a fresh round of U.S. sanctions," said Hussein Sayed, Chief Market Strategist at FXTM, in a note to clients.

Given tight market conditions, he added, Brent oil prices are likely to stay around the $80-a-barrel level.

What stocks are in focus?

Toll Brothers Inc.(TOL) shares slipped 2.6% in premarket after the building company posted a 10% fall in second-quarter profit (http://www.marketwatch.com/story/toll-brothers-profit-dented-by-higher-charges-2018-05-22) on higher impairment charges, and said gross margin fell.

Kohl's Corp.(KSS) shares jumped 5% in premarket after the retailer's earnings beat forecasts and it raised guidance. (http://www.marketwatch.com/story/kohls-shares-jump-after-earnings-beat-guidance-raised-2018-05-22)

AutoZone Inc.(AZO) shares rose 3% in premarket trade after the company blew past profit estimates for the first quarter (http://www.marketwatch.com/story/autozone-shares-jump-3-premarket-after-profit-blows-past-estimates-2018-05-22).

TJX Companies Inc.(TJX) shares were slightly higher after the retailer's quarterly earnings were above estimates.

Hewlett Packard Enterprises Co.(HPE), Intuit Inc.(INTU) and Red Robin Gourmet Burgers, Inc.(RRGB) will report after the close.

Tesla Inc.(TSLA) shares rose 1.1% in premarket after Chief Executive Officer Elon Musk said a problem with its Model 3 raised by Consumer Reports will be fixed with a software release within a few days (http://www.marketwatch.com/story/tesla-shares-jump-11-premarket-after-elon-musk-says-issue-raised-by-consumer-reports-will-be-fixed-shortly-2018-05-22).

Read:GreenSky IPO: 5 things to know about the company seeking to end fintech IPO lull (http://www.marketwatch.com/story/greensky-ipo-5-things-to-know-about-the-company-seeking-to-end-fintech-ipo-lull-2018-05-21)

Sony Corp.(6758.TO), (6758.TO) may be active after the Japanese multinational conglomerate said it has agreed to buy Mubadala Investment Co.'s stake in EMI Music Publishing (http://www.marketwatch.com/story/sony-to-buy-mubadalas-stake-in-emi-music-for-about-23-billion-2018-05-21), in a roughly $2.3 billion deal.

Read:Netflix's new running mates: Barack and Michelle Obama (http://www.marketwatch.com/story/netflixs-new-running-mates-barack-and-michelle-obama-2018-05-21)

What are other markets doing?

Asian markets finished mixed (http://www.marketwatch.com/story/nikkei-pulls-back-from-3-month-high-as-asian-markets-dip-2018-05-21), while European stocks were inching higher (http://www.marketwatch.com/story/european-stocks-inch-higher-as-italy-tensions-ease-for-now-2018-05-22).

Read:'Greek-like crisis' fears hang over Italy's markets as populists ready government (http://www.marketwatch.com/story/greek-like-crisis-fears-hang-over-italys-markets-as-populists-ready-government-2018-05-21)

Gold futures inched up 0.3% to $1,294.10 an ounce. The ICE U.S. Dollar Index fell 0.2% to 93.506, as the pound strengthened against the buck .

Bank of England policy maker Gertjan Vlieghe reportedly predicted up to two interest-rate increases a year (https://www.theguardian.com/business/live/2018/may/22/bank-of-england-governor-mark-carney-grilling-mps-rates-uk-economy-business-live), as officials testified in front of the U.K. Treasury committee.

U.S. oil futures rose 0.3% to $72.60 a barrel (http://www.marketwatch.com/story/oil-prices-hover-at-3-12-year-highs-on-global-supply-worries-2018-05-22), lifted by growing concerns over global supply given worries Venezuela and Iran could come under new sanctions by the U.S.

(END) Dow Jones Newswires

May 22, 2018 08:49 ET (12:49 GMT)

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