It could be tough to top yesterday's showing by the stock market -- which featured a rash of new record highs for the major averages -- but that doesn't mean market participants still won't try. Their resolve has already been tested with the news that the vote on the tax bill in the Senate has been delayed and they have not buckled under the weight of that headline pressure.
Granted the S&P futures were down 16 points in overnight action; however, they are now down just three points.
The word from Capitol Hill is that the Senate parliamentarian said the revenue trigger near and dear to Senator Corker, whereby taxes would increase if economic growth wasn't sufficient to pay for the tax cuts, is against budget rules. Accordingly, the Senate GOP needs to find a way to come up with more revenue to satisfy deficit hawks like Mr. Corker without undermining the tax reform wishes of other GOP Senators.
The Senate will continue debate on the matter today and could potentially vote on a tax bill. The timing of such a vote, though, is uncertain.
What one can glean from the resilience of the futures market is that market participants are still expecting a deal to get worked out in the Senate. If that was not the case, the futures would be much, much lower.
To be sure, the stock market will be at risk of trading much lower if the tax reform effort falls apart, yet that is not the baseline scenario. This week's action has proven as much.
The S&P 500 is up 1.7%, led by a huge rotation into the financial (+4.9%) and industrial (+4.1%) sectors that has been precipitated by tax reform optimism and economic growth optimism. In turn, there has been an ascendance of value investing and a retracement of defensive-oriented trades in the Treasury market.
Separately, there is some earnings news out of the retail industry drawing some increased trading interest. Ulta Beauty (ULTA), Genesco (GCO), and Zumiez (ZUMZ) are trading noticeably lower after their latest earnings reports while Five Below (FIVE) is pushing up after its results.
Another corporate news item of note is the report from CNBC that Amazon.com (AMZN) is reportedly talking to generic drug companies, although it is still unclear what its ultimate intention might be with those conversations.
Today's economic calendar won't go unnoticed. It features the ISM Manufacturing Index (Briefing.com consensus 58.3; prior 58.7) and Construction Spending (Briefing.com consensus +0.5%; prior +0.3%) reports at 10:00 a.m. ET and auto sales for November throughout the day.
The tax reform news, though, is the market's focal point at this juncture.