The stock market made a nice move to begin the week, clinging to the bullish bias that emerged late in Friday's trading action after the S&P 500 tested its 200-day moving average.
The S&P 500 increased 1.4%, the Nasdaq Composite added 1.6%, and the Dow Jones Industrial Average jumped 1.7%. The Russell 2000 trailed behind with a 0.9% gain.
There hasn't been any follow-through this morning, however.
The S&P futures, which had been down as many as 19 points overnight, are down 14 points and are trading 0.5% below fair value. The Nasdaq 100 futures are down 45 points and the Dow Jones Industrial Average futures are down 148 points.
There hasn't been a distinct news catalyst to account for the negative disposition.
Some marginal influences include the continued slide in oil prices ($58.75, -$0.54, -0.9%) after the IEA suggested growth in U.S. output has made things less supportive for prices in early 2018, fiscal concerns, and some skittishness ahead of tomorrow's Consumer Price Index report, which holds the potential to upset the inflation cart and the Treasury market.
Notably, the Treasury market is mixed this morning with losses at the front of the curve and gains at the back end of the curve, which is more inflation sensitive.
The latter is a little surprising given that the UK CPI report for January today was stronger than expected, highlighted by an uptick in the year-over-year rate of core CPI to 2.7% from 2.5%. The UK gilt yield, however, is unchanged at 1.60%.
Sovereign bond markets could be drawing some support perhaps from the expectation that sliding oil prices could provide some inflation relief in coming months.
There is no telling for sure. One could also argue that a flight to safety bid, predicated on an expectation for a renewal of stock market turbulence, is also underpinning sovereign bond markets at the moment.
Just know that there isn't a direct link to rising interest rates to explain this morning's weakness in the futures market.
That weakness probably has more to do with the rebound of the last two sessions, which has seen the S&P 500 advance 123 points, or 4.9%, from its intraday low on Friday.
It has been a "scripted rally" so to speak with buyers showing up to defend the 200-day moving average. Accordingly, some profit taking by short-term speculators is likely kicking in along with an inclination to test the conviction of buyers following the textbook hold of a key technical support level.
Better-than-expected earnings from PepsiCo (PEP), better-than-feared earnings from Under Armour (UAA), and reports suggesting Walgreens Boots Alliance (WBA) might be interested in acquiring the remaining portion of drug distributor AmerisourceBergen (ABC) it does not already own, have not been able to provide a broad market buying boost.
What one has, then, is a market that is back to tape watching as it tries to determine if the rally off Friday's low will have some long legs to it or if it is going to get cut down at the knees again with ongoing efforts to de-risk.