EmailApple (AAPL) didn't have a great day yesterday and that held the Nasdaq back, but the financials did just fine and helped the blue-chip averages post modest gains. Trading volume picked up from Monday, but it certainly wasn't heavy with just 614 mln shares traded at the NYSE.
There was a hesitation factor in play ahead of the president's State of the Union address last night, which was largely more of the same messaging from the president on social, economic, environmental, and fiscal issues.
In other words, the risk of the sequester happening on March 1 remains a real risk.
The stock market, by and large, continues to see no evil, hear no evil, and speak no evil. The S&P futures pressed higher in early-morning action, bolstered by broad-based strength in European markets, and an impressive earnings report from Comcast (CMCSA) that was replete with news the company will boost its dividend 20% and buy General Electric's (GE) remaining 49% stake in NBC Universal for $16.7 bln.
Shares of GE are up nearly 4.0% in premarket trading. That strength will be a key source of support for the blue-chip averages, which continue to push toward all-time high levels set in October 2007.
The S&P futures are trading 0.2% above fair value, so expectations are in place for a slightly higher open for the cash market.
The January Retail Sales report, which was released at 8:30 a.m. ET, didn't have any noticeable impact on the futures market because it was largely in-line with expectations.
Retail sales increased 0.1% (Briefing.com consensus +0.1%). Excluding autos, retail sales rose 0.2% (Briefing.com consensus +0.1%). There were no revisions to the December data.
Core retail sales, which exclude auto, gasoline station, and building material sales, increased 0.1%. This measure factors into economists' PCE estimate for the GDP report.
The message of the January retail sales report is a bit unclear.
Several discretionary categories that saw strength in December (eg. autos, furniture and home furnishings, health and personal care stores, clothing and clothing accessories, food services and drinking places) experienced weakness in January. Other discretionary categories that saw weakness in December (eg. electronics and appliance stores and general merchandise stores) saw strength in January.
There is a reasonable basis to think the effect of the payroll tax hike and higher tax rates for upper-income earners served as restraints on discretionary spending. Even so, we are inclined to look at the January retail sales report as being better than feared.
With more time having elapsed, we expect the February Retail Sales report to be more telling in terms of the impact higher tax rates and higher gasoline prices might be having on retail spending decisions.
