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Consumer confidence, Best Buy earnings — What you need to know in markets on Tuesday

Myles Udland
Markets Reporter

Stocks are at record highs.

On Monday, markets rallied on the back of positive trade developments as the U.S. and Mexico reached an agreement to rework some portions of NAFTA.

Each of the three major U.S. indexes on Monday rose sharply, with the S&P 500 and tech-heavy Nasdaq hitting new records as the Dow moved back above 26,000.

At the close, the Dow was up 259 points, or 1%, the S&P 500 rose 22 points, or 0.8%, and the Nasdaq rose 72 points, or 0.9%. Monday marked the first close above 8,000 for the Nasdaq.

Shares of major auto companies including Ford (F), General Motors (GM), and Fiat Chrysler (FCAU) were big winners on Monday as the new U.S.-Mexico trade agreement requires 75% of a car’s content be made in the NAFTA region to be exempt from tariffs.

Financial stocks were also market leaders on Monday, with the XLF ETF that tracks the sector rising 1.3% and Goldman Sachs (GS) shares rising 3.1% to lead the Dow higher.

President Donald Trump talks on the phone with Mexican President Enrique Pena Nieto, in the Oval Office of the White House, Monday, Aug. 27, 2018, in Washington. Trump is announcing a trade “understanding” with Mexico that could lead to an overhaul of the North American Free Trade Agreement. Trump made the announcement Monday in the Oval Office, with Mexican President Enrique Pena Nieto joining by speakerphone. (AP Photo/Evan Vucci)

Overall, Monday’s market reaction was somewhat reminiscent of what we grew accustomed to in 2017 as investors appeared sanguine as risks about North Korea while bidding up shares amid any seemingly positive developments on tax reform. This bet ended up being correct.

And though the markets this year have been more sensitive to negative developments regarding trade, Monday’s trade reflects an investor base still ready to reward good news in markets.

“[Monday’s] announcement of a bilateral trade agreement is definitely good news for Mexico and the US, but could be good or very bad for Canada,” Paul Ashworth, chief U.S. economist at Capital Economics, said on Monday. “More generally, it illustrates that, despite the Trump administration’s intransigence over trade disputes in recent months, it is willing to negotiate in good faith and accept a compromise, which will be welcomed in both China and Europe.”

On Tuesday, investors will get a key piece of economic sentiment data when The Conference Board releases its August update on consumer confidence. This report will be closely tracked as the University of Michigan’s read on consumers’ economic outlook revealed consumers could be more sensitive to price changes if tariffs lead to inflation across consumer good.

The June report on home prices from S&P/Case-Shiller is also due out in the morning as is the Richmond Fed’s reading on manufacturing activity in August.

And on the earnings side, the retail sector will be in focus Tuesday morning with Best Buy (BBY) and Tiffany (TIF) set to report earnings. Best Buy has been one of the big success stories in retail over the last couple years, with the stock up 30% over the last twelve months and more than doubling over the last 24. Wall Street expects the company to report same-store sales rose 4.2% in the second quarter.

Other members of the S&P 500 reporting results Tuesday are expected to include HP Enterprise (HPE) and H&R Block (HRB).

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland