U.S. stock futures higher ahead Trump's budget plan to cut spending

[May 23, 2017]  By Tanya Agrawal

(Reuters) - U.S. stock index futures were modestly higher on Tuesday, shrugging off a deadly bomb blast in Britain and ahead of U.S. President Donald Trump's first full budget plan that is aimed at slashing government spending.

U.S. futures slipped slightly on Monday evening, before recovering, on news of the suicide attack that killed at least 22 people and wounded 59 at a pop concert in the English city of Manchester.

European stocks edged up after a sluggish start on Tuesday.

Trump's budget proposals includes chopping government spending over the next decade by $3.6 trillion, including through cuts to healthcare and food assistance programs for the poor, with the aim of balancing the budget in 10 years.

The plan also includes selling off half the country's huge oil stockpile, a proposal that weighed on crude oil prices as it threatened a future glut even as OPEC and its allies cut output to try and tighten the market. [O/R]

Congress holds the federal purse strings and often ignores presidential budgets, which are proposals and may not take effect in its current form.

Wall Street closed higher on Monday boosted by technology shares and by defense companies, which gained after the United States and Saudi Arabia signed a $110 billion arms deal.

The deal was struck during Trump's visit to Saudi Arabia over the weekend, a trip the White House hopes will shift focus away from domestic controversies such as the president's firing of the former Federal Bureau of Investigation chief and probes into his administration's possible links to Russia.

Investors are becoming increasingly concerned that Trump's political problems will make his economic-friendly policies, such as tax cuts and boosting infrastructure spending difficult, to pass through Congress.

A trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 3, 2017. REUTERS/Brendan McDermid

Among stocks, shares of Toll Brothers rose 2.5 percent to $39 after the luxury homebuilder reported a 40 percent rise in quarterly profit.

U.S.-listed shares of Nokia were up 6.2 percent at $6.59 after the company settled a patent dispute with Apple. Apple was marginally higher at $154.20.

Videogame maker Take-Two  fell 3.3 percent to $66.78 after it forecast full-year revenue well below analysts' estimates.

Economic data due includes a report that is expected to show new home sales declines 1.5 percent in April, compared with a 5.8 percent rise in March. The report from the U.S. Commerce Department is due at 10 a.m. ET (1400 GMT).

Separately, Markit Manufacturing Flash PMI for May is likely to come in at 53 vs a final reading of 52.8 in April.

(Reporting by Tanya Agrawal; Editing by Savio D'Souza)

[© 2017 Thomson Reuters. All rights reserved.]

Copyright 2017 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.