The stock market had a hiccup yesterday and nothing more. The major indices slipped between 0.1% and 0.2%. They look ready, however, to make up that lost ground at today's open.
The S&P futures are up five points, the Nasdaq 100 futures are up 20 points, and the Dow Jones Industrial Average futures are up 30 points, leaving them all trading roughly 0.1% to 0.2% above fair value.
Bank of America (BAC) is helping things along a bit, having topped third quarter earnings expectations. The bank had a decent report overall, as did JPMorgan Chase (JPM) and Citigroup (C) yesterday. The key difference is that the response to BAC's results has been positive.
Shares of BAC are currently up 1.1% in pre-market action, whereas JPM and C declined 0.9% and 3.4%, respectively, on Thursday. Market participants will be watching to see if BAC can maintain its positive disposition. If it does not, the financial sector could pivot to being a spot of relative weakness again as the reality sinks in that the sector is ripe for a sell-the-news response to good earnings reports following the huge run it has made over the last month.
Wells Fargo (WFC), meanwhile, is down 1.6% after reporting third quarter results that failed to meet expectations and which look comparatively softer than the ones registered so far by some of its peers.
Some other key earnings developments include a third quarter warning from Applied Optoelectronics (AAOI), which has its stock down 20%, and an earnings shortfall from trucking company JB Hunt (JBHT), which has knocked its stock 0.8% lower in pre-market trading.
It's not an earnings story today, however. Economic data is factoring prominently in the early going. China got things rolling overnight with a mixed trade balance report for September, yet the Retail Sales and Consumer Price Index (CPI) reports for September kept things on a favorable line for the futures market.
Retail sales increased 1.6% in September, as expected, with increases in gasoline station (+5.8%), auto (+3.6%), and building material (+2.1%) sales all getting a hurricane-related boost and leading the way. Excluding transportation, auto sales increased 1.0% (Briefing.com consensus +0.8%) on the heels of an upwardly revised 0.5% increase (from +0.2%) in August.
The key takeaway from the report is that core retail sales, which exclude auto, gas, building material, and food services and drinking place sales, and which factor into GDP computations, increased a solid 0.6%.
The CPI report featured a 0.5% increase in total CPI (Briefing.com consensus +0.6%) and a 0.1% increase in core CPI, which excludes food and energy (Briefing.com consensus +0.2%). The gasoline index increased 13.1% and accounted for about three-fourths of the increase in total CPI.
The headline numbers were a little softer than expected, which will create some chatter that they could sway the Fed into thinking that it would be prudent to hold off on a rate hike at its December meeting.
The key takeaway from our vantage point, though, is that the September CPI report hasn't run afoul of the Fed's price stability mandate. To that end, total CPI is up 2.2% year-over-year, versus 1.9% in August, and core CPI is up 1.7% for the fifth month in a row.
The futures market got a little kick out of the knee-jerk assessment of the economic data and so did the Treasury market, which reversed some earlier losses.
Today's open, then, should be positive for stocks, but once again, it is the close that will be more interesting for market participants as they battle with a sense that the stock market is due for a pullback.