EmailThe month of April has an established history of being a good month for the stock market. After a rough start, the S&P 500 is up 0.8% month-to-date and just two sessions remain to secure another positive entry in the historical record.
At the moment, things are looking good for the market to add a little cushion at the open to this month's gains. The S&P futures are up six points and are trading 0.3% above fair value.
The positive disposition has been aided by gains in European markets, which have stemmed from a sense of relief that Italy is installing a new government, austerity measures could be tempered, and the ECB could cut interest rates when it meets on Thursday.
The ECB meeting is one of several major happenings this week, which also includes the FOMC decision on Wednesday, a Bank of England meeting on Thursday, and the April Employment Situation report on Friday. In addition, close to 140 S&P 500 companies will be posting their quarterly earnings results.
There won't be any shortage of trading catalysts as the week progresses, yet the ECB decision and the nonfarm payrolls report promise to be the biggest influences.
What was learned last week is that market participants around the world are expecting major central banks to keep lending their full support to recovery efforts. That means staying the current course for the Fed and new action on the part of the ECB. If the ECB stays on its current course, it will be seen as a disappointment.
There isn't any reason to think the Fed will deviate from its policy path as recent data have shown a softening in economic activity. The Personal Income and Spending report for March, which was released this morning, won't alter consensus expectations.
Both income and spending rose 0.2%. The Briefing.com consensus called for a 0.3% increase in personal income and a 0.1% jump in personal spending. Much of this information was embedded in the disappointing Q1 GDP report released on Friday.
The key reminder that the Fed is going to stay on policy cruise control is the price index for PCE. It was flat in March, leaving the year-over-year increase at just 1.1%, which is down from 1.3% in February. Total PCE was up just 1.0% year-over-year, leaving both inflation gauges well below the Fed's 2.0% inflation goal.
The S&P futures were little changed in the wake of the income and spending report. Treasuries, however, picked up a bit. The 10-year note is up two ticks and its yield sits at a notably risk-off 1.66%.
