At their lows on Monday, the S&P 500 information technology sector and the Nasdaq Composite were down 2.5% and 1.6%, respectively. It ended up being construed as an encouraging development, then, that they closed Monday's session down just 0.8% and 0.5%, respectively.
Their success in paring larger losses reduced some of the edge that had been building about the tech sector's weakness eventually spilling over in a more meaningful fashion to the broader market. It was a supportive factor, too, that the financial sector managed to hold its ground and scored a modest gain on the heels of Friday's 1.9% advance.
The selling reprieve in the technology sector has helped boost the stock market's spirits for the time being, evidenced by pre-market gains in the S&P 500 and Nasdaq 100 futures.
At this juncture, the S&P futures are up five points and are trading 0.2% above fair value while the Nasdaq 100 futures are up 24 points and are trading 0.4% above fair value.
There isn't any news flow that fully accounts for the positive disposition, which is why it can be deemed more psychological in nature than fundamental.
The Producer Price Index for May shouldn't be construed as a driver. It showed the index for final demand was unchanged, as expected, and that the index for final demand excluding food and energy was up a stronger than expected 0.3% (Briefing.com consensus 0.2%).
The index for final demand was up 2.4% year-over-year versus 2.5% in April while the index for final demand excluding food and energy was up 2.1% versus 1.9% in April.
The key takeaway from the report is that it supports the Fed's inclination to favor a policy tightening bias.
Market participants will soon have another sight line into the Fed's thinking when it makes a policy announcement on Wednesday and Fed Chair Yellen presumably discusses the conversations Fed members are having about balance sheet normalization.
The specter of that announcement will be lurking in today's trading background, as will the impending testimony by Attorney General Sessions before the Senate Intelligence Committee at 2:30 p.m. ET. It will be the tech sector's price action, though, that occupies the foreground.
That price action is supportive for now with Apple (AAPL), Alphabet (GOOG), Microsoft (MSFT) and Facebook (FB) all indicated to open higher. For good measure, Amazon (AMZN), which is in the consumer discretionary sector, is also indicated to open higher.