The S&P futures were up 12 points overnight, then they were down 10 points, then they were unchanged, and now they are down four points. That roller-coaster action is indicative of a market that doesn't know what to think at a time when there is plenty about which to think.
Will the trade issues start to avail themselves in weakening levels of business confidence and hard economic data?
Will OPEC raise its production target and sink oil prices ($65.91, +$0.84, +1.3%) or will it manage to keep a bid in prices by making sure it doesn't raise its output too much?
Will the Federal Reserve undercut the bull market with additional rate hikes?
Will the FAANG trade unwind on an enlightened sense that it is overcrowded?
Will the emerging markets buckle under the pressure of a strengthening dollar?
These are just some of the questions to ponder, and the uncertainty of the answers has been enough to keep the S&P 500 hamstrung in its effort to break through the 2800 level.
That's not to say the S&P 500 has done badly. On the contrary, it has done great since early April, rising 8.4%. The Nasdaq Composite and Russell 2000, meanwhile, have set a series of new record highs along the way.
The stock market isn't in a state of distress by any means, yet it has its stress points, like trade concerns and a flattening yield curve, which have weighed on the industrials, basic materials, and financial sectors in a striking fashion throughout the year.
To wit, the S&P 500 is up 3.5% year-to-date, yet the industrials, basic materials, and financial sectors are down 3.4%, 3.6%, and 2.3%, respectively, at a time when the market narrative is also filled with praise for how strong earnings growth has been and how strong GDP growth is expected to be in the second quarter.
The asymmetrical showing is testing investor confidence and is restraining animal spirits at this juncture.
Some animal spirits, though, are breaking through in the information technology sector, which is up 14.0% year-to-date, paced by the leadership of its mega-cap components.
Micron (MU) delivered an earnings report and fiscal fourth quarter outlook last night that was supportive of the information technology sector's outperformance. Shares of MU are up 4.2% in pre-market action and will be watched carefully throughout the day to see if they can sustain that gain.
If that gain gets wiped out, it could serve as a marker for a broader, profit-taking pullback in the hot sector.
Right now, though, there is an expectation that the broader market will be supported in the early going by relative strength in the information technology sector.
The Nasdaq 100 futures are down five points, yet they are trading a smidgen above fair value. The Dow Jones Industrial Average futures, meanwhile, are down 78 points and are trading 0.3% below fair value.
The latter dropped back further after this morning's economic releases.
There was nothing concerning in the initial claims report, which showed claims decreasing by 3,000 for the week ending June 16 to 218,000 (Briefing.com consensus 220,000). If one wanted to extrapolate a concern, it would be the notion that the low level of initial claims will keep the Fed inclined to raise interest rates.
The Philadelphia Fed Index was a bit disappointing, checking in at 19.9 for June (Briefing.com consensus 27.0) versus 34.4 for May, led by a sharp pullback in the New Orders Index to 17.9 from 40.6. A number above 0.0, however, still denotes expansion.
Separately, the Bank of England voted 6-3 to maintain its Bank Rate at 0.50%, as expected, yet it took a less dovish line in suggesting it intends not to reduce its stock of asset purchases until the Bank Rate reaches around 1.5%, compared to its previous guidance of around 2.0%. The pound is up 0.6% against the dollar at 1.33.