If we told you Alphabet (GOOG) disappointed with weaker-than-expected revenue growth, and that China disappointed with weaker-than-expected manufacturing PMI data for April, you might be inclined to think the stock market is going to open sharply lower. Well, think again.
Shares of GOOG are indicated 7.5% lower, yet the S&P 500 futures are trading only 0.1% below fair value. The Dow Jones Industrial Average futures, meanwhile, are trading 0.3% above fair value.
The weak spot is the Nasdaq 100 futures. They are down 25 points and are trading 0.8% below fair value, which isn't bad given the scope of Alphabet's indication.
In terms of the broader market, what GOOG taketh away, other stocks are giving back, namely McDonald's (MCD), Merck (MRK), Pfizer (PFE), Mastercard (MA), ConocoPhillips (COP), and General Electric (GE).
Those stocks are all trading higher after their earnings reports. They aren't the only ones, yet the point is that market participants aren't being dissuaded from participating by the Alphabet disappointment so much as they are being persuaded to participate in other names because of the Alphabet disappointment.
Basically, it is a reminder that there is an investment life out there beyond the mega-cap growth stocks.
They aren't being dissuaded either by the report out of China indicating the official manufacturing PMI for April slipped to 50.1 from 50.5 in March or that the Caixin manufacturing PMI, which covers smaller and mid-sized manufacturers, slipped to 50.2 from 50.8 in March.
Why would that be the case? Well, a number above 50.0 still connotes expansion, yet we suspect the more persuasive thought is the idea that the deceleration could keep Chinese officials inclined to keep the policy stimulus coming. Notably, China's Shanghai Composite finished Tuesday up 0.5%.
There is a good bit of data out of the U.S. today.
The Q1 Employment Cost Index increased 0.7% (Briefing.com consensus +0.8%), seasonally adjusted, for the three-month period ending in March 2019 after increasing 0.7% for the three-month period ending in December 2018.
Wages and salaries, which account for about 70% of compensation costs, rose 0.7%, while benefit costs, which make up the remainder of compensation costs, also increased 0.7%. Compensation costs for civilian workers increased 2.8% for the 12-month period ending in March 2019 versus 2.7% for March 2018.
The key takeaway from the report is that there has been some moderation in the growth rate of employment costs.
The S&P Case-Shiller Home Price Index for February (Briefing.com consensus +3.1%) will be out at the top of the hour. That report will be followed by the Chicago PMI for April (Briefing.com consensus 58.2) at 9:45 a.m. ET, and the Consumer Confidence report for April (Briefing.com consensus 127.3) and Pending Home Sales report for March (Briefing.com consensus +1.1%) at 10:00 a.m. ET.
The report that will be on everyone's trading radar, though, is after the close. Enter Apple (AAPL), which is set to deliver its quarterly results after the closing bell rings.