Hurricane Irma might have been downgraded to a tropical depression, yet her hurricane-force winds were felt yesterday on Wall Street by short sellers as the major indices all rallied at least 1.1%. It was a relief trade that left the S&P 500 at a new closing high and on the threshold of setting a new record high, which it looks likely to do at the start of today's trading.
Currently, the S&P futures are up four points, the Nasdaq 100 futures are up 14 points, and the Dow Jones Industrial Average futures are up 55 points. If those indications hold, the major indices would open the day 0.2% to 0.3% higher.
There isn't much news to account for the positive bias, which has mostly to do with carryover momentum from yesterday's broad-based recovery rally.
It is the absence really of any distinctly bad news that has kept the rebound trade going.
Accordingly, an opening has been created to focus on positive-sounding headlines. To wit:
- The UN Security Council voted unanimously to impose stronger sanctions on North Korea that cap oil imports and block textile exports
- There are press reports suggesting the debt limit may not be reached now until March 2018, which creates some possible calendar-based cushion to avert a paralyzing budget negotiation at year end
- The Trump administration is moving ahead with tax reform efforts, from crafting a plan to selling it to the public; and
- Hurricane recovery efforts could be a trigger for stronger economic growth in coming quarters
Another focal point today is the product event being held by Apple (AAPL). That event will kick off at 1:00 p.m. ET and it is expected to feature the introduction of the iPhone 8, a new Apple watch, and 4K Apple TV.
Press previews of the event have leaked many of the expected product announcements. Market participants will be interested anyway in what Apple CEO Tim Cook has to say, yet their real focus will be on how AAPL trades after the event.
AAPL is up 39% year-to-date and has had some outsized influence on the performance of the S&P 500 information technology sector (+25.7% YTD).
If AAPL rolls over on a sell-the-news response and takes other stocks with it that have run in anticipation of the iPhone 8 release, it will temper the broader market's upside potential barring a rotation into underperforming areas like the heavily-weighted financial sector.
The latter led Monday's charge and it appears poised to exhibit some relative strength in the early going today, bolstered by the curve steepening trade that has persisted in the Treasury market.
The yield on the 10-yr note has increased one basis point to 2.14% while the yield on the 2-yr note is unchanged at 1.32%. The spread between the two is 82 basis points versus 77 basis points on September 6.
The lone economic release today is the JOLTS - Job openings report for July, which will be released at 10:00 a.m. ET.