The stock market is indicated to open higher. The S&P futures are up nine points, the Nasdaq 100 futures are up 24 points, and the Dow Jones Industrial Average futures are up 103 points.
That's a black-and-white read of things for a stock market that has been trading in technicolor since the ball dropped in Times Square.
The S&P 500 is up 6.2% year-to-date. The Dow Jones Industrial Average is up 6.0%, but once again, the Nasdaq Composite has been the winning standout among the major indices with a year-to-date gain of 8.1%.
For good measure, the Philadelphia Semiconductor Index is up 11.2%.
Yeah, we'd say it has been a pretty good start to the year. In fact, it has been so good that Bank of America/Merrill Lynch was compelled yesterday to raise its 2018 price target to 3,000 because its previous price target of 2,800 had already been reached in the first three weeks of trading.
The positive price action -- and the resilience to selling interest -- has been a driver of the bullish bias this morning, but to be fair, it is more than that.
There is a real appreciation for the boost to 2018 earnings growth estimates on the back of the tax reform plan, and, for the most part, corporate America is validating the increased expectations.
United Technologies (UTX), United Continental (UAL), W.W. Grainger (GWW), Rockwell Automation (ROK), Norfolk Southern (NSC), Abbott Labs (ABT), Amphenol (APH), Comcast (CMCSA), General Dynamics (GD), Illinois Tool Works (ITW), and Stanley Black & Decker (SWK) all exceeded analysts' average earnings expectations for the December quarter.
Guidance was reassuring in most cases, too.
United Continental is down 6.7% in pre-market action, though, as investors are worried about its plan to boost capacity growth 4-6% in 2018 and likely in 2019 and 2020 as well. That plan has sparked concerns about pricing battles that are weighing on most airline stocks this morning.
Texas Instruments (TXN) is another stock getting hit hard in pre-market trading. Shares are down 6.9% after the chip maker met earnings expectations and provided in-line guidance for the first quarter. Nothing wrong with that, but when your stock goes up 23% since the start of December, like TXN has, in-line is a little underwhelming and often a trigger to sell the news.
Conversely, when your stock goes down 44% over the last 52 weeks, like GE has, the bar of expectations is much lower. General Electric (GE) actually came up shy of fourth quarter earnings estimates, but its stock is indicated 4.6% higher in pre-market trading because its in-line guidance for FY18 was better than feared.
The long and short of things is that the earnings reporting and guidance, in aggregate, hasn't provided any strong basis for this market to distance itself from its bullish bias.
In the same vein, Treasury Secretary Mnuchin helped underpin that bias this morning with a contention in Davos that the weaker dollar will benefit the U.S. from a trade standpoint.
That should prove true; and it will also benefit the earnings prospects for U.S. multinational companies.
Sure enough, the U.S. Dollar Index has taken a hit on that headline, slipping to a three-year low of 89.49 (-0.7%). That move might have occurred anyway given the encouraging composite PMI reading out of the eurozone and Japan's trade balance report, which featured a 14.9% year-over-year increase in imports.
The weaker dollar is being viewed more these days, though, as a boost to earnings prospects than it is as a possible trigger for higher inflation that could prompt more aggressive tightening by the Federal Reserve. That bridge will be crossed when/if the inflation data brings the market to it.
For now, the stock market isn't getting caught up in any such shades of grey. It's dialed in on positive thoughts and the color green that has been painted across stock monitors thus far in 2018.