The early bird isn't catching any worms at the moment. The S&P futures are down three points and are trading 0.1% below fair value. Time and again this month, though, the stock market has demonstrated that the early bird is a late riser.
Monday was no exception. The major indices had their patented early dip and subsequent rebound effort that led to a positive finish. For the Dow Jones Industrial Average, it was the 12th straight record close, maintaining a winning streak that was last seen in 1987.
There isn't much reasoning behind the early disposition, which is to say some previously used excuses are being trotted out again, namely a wait-and-see attitude ahead of President Trump's speech before a joint session of Congress tonight and the expectation that the market is due for a pullback.
To be sure, if the futures were up, you'd see attention being paid to a continuation of the reflation trade and optimism over the idea that President Trump will talk up tax reform and infrastructure spending in tonight's speech.
As it so happens, the president told FOX News he will discuss the health care plan, military spending, border security, tax reform, and infrastructure in tonight's speech. What remains unclear is if he will share any specific details on anything other than his defense budget.
A speech of more superlatives won't be all that super in our estimation, yet this market has shown a terrific degree of willingness to accept form over substance, so we can't assume it will be put off entirely by another speech of generalities.
The latest earnings results and guidance from retailer Target (TGT) were anything but super. Shares of TGT are indicated 13% lower in pre-market action as investors express their disappointment in the company's performance and sharply reduced earnings expectations for fiscal 2017.
In economic news, the second estimate for Q4 GDP stayed true to the advance estimate, which was otherwise lackluster, showing real GDP increased at an annual rate of 1.9% in the fourth quarter (Briefing.com consensus 2.1%). The GDP Deflator was revised to 2.0% from 2.1%.
With the second estimate, personal consumption expenditures were shown to have increased 3.0%, versus 2.5% with the advance estimate. That upward revision, however, was offset by reduced estimates for state and local government spending, and nonresidential fixed investment. Real final sales were unrevised, up 0.9%, which was the weakest growth rate since the first quarter of 2014.
The key takeaway from the report is that soft business spending continues to act as a drag on GDP growth.
Separately, the advance report for international trade in goods for January showed a widening in the deficit to $69.2 billion from $64.4 billion in December. That widening will be accounted for as a negative input to Q1 GDP forecasts.
There will be a number of Fed speakers today, yet the speech from President Trump at 9:00 p.m. ET tonight is the market's real focal point on the last trading day of what has been a very good month for the stock market.