It has been some kind of tax reform party in the stock market, but now things seem to be dying down as the lights have been turned on, the music has been turned down, and the bar has run out of top-shelf spirits. What's left isn't so much a pounding hangover for the stock market as it is a post-binge fog.
Everyone is going through the motions at the moment, yet there isn't much energy behind the drive to get the band back together and the tax bill party started again.
That sense of things took shape on Wednesday when the bulls pounded their champagne early, soon hit a wall, and went home.
At their highs on Wednesday, the Dow Jones Industrial Average, S&P 500, S&P Midcap 400, Nasdaq Composite, S&P Midcap 400, and Russell 2000 were up 6.1%, 4.2%, 3.2%, 3.0%, and 2.7%, respectively, over the last month.
In other words, they were short-term overbought and seemingly poised to take a breather -- and that's what they did. The S&P 500 for its part ended Wednesday down two points or 0.1%.
There is a modest bid in the futures market this morning. The S&P futures are up seven points, the Nasdaq 100 futures are up 11 points, and the Dow Jones Industrial Average futures are up 56 points. That should be good for some modest gains at the open.
How things roll after that is indeterminate, particularly since trading conditions could start to thin out as market participants happily take early exits to get a start on the Christmas weekend.
Congress, though, can't just pack up and go home now that the tax bill has passed. There is still the unfinished business of working out a funding resolution before midnight on Friday to avert a shutdown.
Reports suggest that should happen, with a stopgap resolution that funds things through January 19, yet nothing has been finalized yet.
On a related note, the final act of signing the tax bill into law by President Trump is reportedly going to take place January 3 in a purposeful delay that will ensure automatic spending cuts to Medicare don't happen until 2019.
The rest of the news this morning includes a hodgepodge of corporate and economic news items, none of which are having any pronounced impact on broader market sentiment.
AT&T (T) and Comcast (CMCSA) were quick to announce that, with the implementation of tax reform, they will be offering $1,000 bonuses to their workers and increasing their capital spending plans. For the same reason, Wells Fargo (WFC) announced an increase in its minimum hourly pay rate to $15.00 per hour from $13.50. Fifth Third (FITB) is also raising its minimum hourly wage to $15.00 and will give a $1,000 bonus to more than 13,500 employees.
That is precisely the type of news the GOP hopes to hear more of in the wake of cutting the corporate tax rate. To be sure, the more companies that follow with similar announcements, the more 2018 economic sentiment will keep riding high.
In terms of the economy, the third estimate for third quarter GDP carried a slight downward revision to 3.2% (Briefing.com consensus 3.3%) from 3.3%, as more complete source data showed personal consumption expenditures increased less than previously estimated (2.2% vs. 2.3%). The GDP Deflator was left unchanged at 2.1%, as expected.
This report will have a negligible impact on today's market because it is dated and largely in-line with expectations.
Initial claims for the week ending December 16 increased by 20,000 to 245,000 (Briefing.com consensus 236,000) while continuing claims for the week ending December 9 increased by 43,000 to 1.932 million.
While the claims headlines were a little worse than expected, they did nothing to disrupt the underlying trend of jobless claims running near historically low levels. As an aside, the initial claims data covered the period in which the household survey was conducted for the December employment report so it could temper expectations for nonfarm payroll gains north of 200,000.
Finally, the Philadelphia Fed Index for December didn't temper any of the enthusiasm for the manufacturing sector in the Philadelphia Fed region. The diffusion index for current general activity increased from 22.7 in November to 26.2 in December (Briefing.com consensus 21.0), led by an eight-point jump in the New Orders Index from 21.4 to 29.8.