Market participants are holding their fire for the most part this morning, which is leaving the cash market on course for a relatively flat start. The S&P futures are up less than a point and are trading less than a tenth of a point above fair value.
That's just an opening guide, however. Clearly, the relatively subdued nature of the S&P futures in pre-market action the last four days has not dissuaded buyers from getting more engaged after the opening bell. That point rings home in the understanding that the S&P 500 has increased 1.8% over the last four sessions.
The subdued tone this morning, then, is nothing out of the trading ordinary.
It reflects a bit of a wait-and-see mentality as participants wait to see if the rebound effort from last week's sell-off will persist and what sectors will be leading -- or lagging -- and acting as directional drivers.
The financial, information technology, transport, and energy stocks will be focal points in the latter respect.
In the meantime, the release of the FOMC Minutes from the May 2-3 meeting at 2:00 p.m. ET today has been cited as an item holding the market in check for the time being. Traders reportedly want to see what Fed officials were discussing with respect to the timing and manner of policy normalization, particularly with respect to the Fed's balance sheet.
Philadelphia Fed President Harker (an FOMC voter) said last night that he still thinks it is appropriate to raise the fed funds rate three times in 2017, but conceded that a further softening in core inflation could prompt him to re-think his view.
The FOMC Minutes are typically an exercise in analytical frustration since they rarely provide any definitive insight, which is embodied in the copious use of expressions like "some," "a few," "several," "many" to convey the thoughts of Fed members in attendance.
We'd be surprised if the minutes today contained any real policy shock value, but because it's the Fed -- the world's most influential central bank -- it is incumbent to give the minutes a full read.
Other items limiting buyers' enthusiasm ahead of the opening bell include disappointing earnings report from Lowe's (LOW) and Advance Auto Parts (AAP), news that Moody's downgraded China's debt rating for the first time since 1989 to A1 from Aa3 amid concerns about an erosion in China's financial strength, and an assertion by Treasury Secretary Mnuchin that a push for a border adjustment tax could act as a headwind on the broader tax reform effort.
There is also an emerging sense of angst in front of Thursday's production cut meeting between OPEC and certain non-OPEC members. Oil prices have run sharply on speculation that the meeting will lead to a nine-month extension in the production cut and a possible increase in the amount of production being cut. Traders appreciate that the meeting could be ripe for a surprise, either positive or negative.
On a related note, the American Petroleum Institute last night reported a 1.5 million barrel drawdown in oil stockpiles. The Department of Energy will release its weekly inventory report at 10:30 a.m. ET. Oil prices are currently down 0.5% at $51.24 per barrel.
The Existing Home Sales report for April (Briefing.com consensus 5.65 million; prior 5.71 million) will be released at 10:00 a.m. ET.