Last week concluded on a high note thanks to a return to form for the sentiment-leading information technology sector, which followed yet another employment report showing solid job growth and tepid wage inflation. In other words, it was a "just right" report for the stock market, which has feasted through the years on the notion that the economy is growing but not so much to pull forward too many rate hikes from the Fed before their time.
The gains on Friday, however, came on light volume, which was not altogether surprising given the fixation on vacation schedules last week.
We're still in the high season for vacations, yet this week should have a more business-like feel to it for several reasons: (1) Fed Chair Yellen will be giving her semiannual monetary policy report to the Congress on Wednesday and Thursday (2) the second quarter earnings reporting period will be launched on Friday when JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) report their results and (3) there is key economic data at the end of the week in the form of the Retail Sales and CPI reports for June.
One could make a case this morning that traders have a bit of a wait-and-see mindset right now in front of those developments.
The S&P futures are up flat and are trading roughly in-line with fair value. The Nasdaq 100 futures, meanwhile, are up 4 points and are also trading roughly in-line with fair value.
There is a sense that the information technology sector will begin the session showing some relative strength thanks to some positive coverage for the semiconductor stocks, which has included a report that Needham lifted its price target on NVIDIA (NVDA) to $200 from $130.
Relative strength in the closely-followed semiconductor group would be nice for many to see, yet traders in general will be watching the performance of the Nasdaq 100 closely to see if it can regain a posture above its 50-day simple moving average at 5714.71. The ETF counterpart of note is the PowerShares QQQ Trust (QQQ 137.76), which sits below its 50-day simple moving average of 139.26.
The S&P 500 for its part wasted little time reclaiming a position above its 50-day simple moving average, which gave way on Thursday amid stepped-up selling efforts.
Traders will want to see the Nasdaq 100 get back in technical line, but if it fails to do so, the selling interest could be renewed and cast a pall on the broader market.
There isn't any economic data of note out of the U.S. today other than the Consumer Credit Report for May (Briefing.com consensus $12.7 billion) at 3:00 p.m. ET. The CPI and PPI reports for June out of China over the weekend were basically steady with the prior month. CPI was up 1.5% year-over-year while PPI was up 5.5%; however, there was a month-over-month decline in CPI (-0.2%) that signified some fading momentum for consumer prices.
Markets in Asia took the news in stride, keying mostly off Wall Street's positive close to last week
In other developments, Treasury Secretary Mnuchin clarified that the administration isn't pushing a tax hike on the wealthy, as had been rumored last week, and the G-20 Summit concluded with a textbook statement that covered an aim to prevent protectionism and to secure free trade.
Oil prices are down 0.5% to $43.99 per barrel and sovereign bonds have attracted some buying interest after some decisive selling of late. The yield on the German bund is down four basis points to 0.54% while the yield on the 10-yr note is down one basis point to 2.37%. Traders will be keeping close tabs on both markets, yet watch for trading sentiment once again to key off the performance of the information technology sector.