The stock market is slated for a negative open thanks in large part to the negative move by North Korea in the early Asian morning to launch a test missile that flew over northern Japan before crashing into the sea.
The S&P futures are down 15 points, the Nasdaq 100 futures are down 52 points, and the Dow Jones Industrial Average futures are down 119 points. Those indications, if they hold, should leave the major indices down about 0.5% to 0.8% at the start of trading.
A consolation in the matter is that the futures have moved off their overnight lows, which saw the S&P futures, the Nasdaq 100 futures, and the Dow Jones Industrial Average futures down as many as 22 points, 72 points, and 145 points, respectively.
A relatively calm reaction by Asian stock markets on Tuesday helped turn the tide of negativity. To wit, Japan's Nikkei dropped only 0.5%, South Korea's KOSPI Index dipped just 0.2%, and China's Shanghai Composite actually increased 0.1%.
The mood in Europe, however, hasn't been as calm. Germany's DAX Index is down 1.8%, France's CAC 40 is down 1.3%, and the UK's FTSE 100 is down 1.1%.
On a related note, the CBOE Volatility Index is up 17.8% in the early going to 13.33, the 10-yr note is up a half point, lowering its yield six basis points to 2.10%, the U.S. Dollar Index is down 0.4% to 91.83, and gold is up 1.0% to $1327.80 per troy ounce.
Clearly, there is an element of risk aversion in today's trading mix, which has been fueled by President Trump's reminder that "all options are on the table" in considering a response to North Korea's threatening actions.
The question is, will the risk aversion persist?
Oftentimes, worrisome geopolitical matters drive defensive positioning that gets unwound when the stock market shows some unexpected resilience to selling interest. That can lead to a short squeeze that can quickly repair any opening selling damage.
The complicating matter(s) for the turnaround trade today, however, could include separate worries about the economic impact of Hurricane Harvey, the contentious political backdrop leading up to next month's budget and debt ceiling business in Congress, the specter of the U.S embracing protectionist trade practices, and weakening market internals that were evident before North Korea's latest missile launch.
The macro considerations have taken hold this morning and have overshadowed the better than expected earnings report and increased outlook shared by consumer electronics retailer Best Buy (BBY), which came on the heels of a very disappointing second quarter warning and reduced fiscal 2018 outlook shared by athletic shoe and apparel retailer The Finish Line (FINL).
Today's economic calendar features the Case-Shiller Home Price Index for June (Briefing.com consensus 5.7%) at 9:00 a.m. ET and the Consumer Confidence report for August Briefing.com consensus 120.3) at 10:00 a.m. ET.
The August employment report on Friday is the week's most important report, yet the capital markets are contending with other hot matters this morning that have left that report on the back burner.