If there is one thing to be gleaned from the futures market this morning, it is this: the Dow Jones Industrial Average is not "the market." When one refers to "the market," think the S&P 500.
With that in mind, the market is indicated to open modestly higher as the S&P futures are up six points and trading 0.4% above fair value. The Nasdaq 100 futures are up 31 points and are trading 0.5% above fair value. The Dow Jones Industrial Average futures, meanwhile, are down 199 points and are trading 0.6% below fair value.
Why is there such a kink in the Dow futures?
Look no further than shares of Dow component Boeing (BA), which are indicated 12% lower following an Ethiopian Airlines 737 Max-8 crash over the weekend. That crash has prompted China, Indonesia, and Ethiopia to ground all 737 Max-8 planes until authorities there have a better understanding of the plane's safety standards and the cause of the crash in Ethiopia that has been cast as having many similarities to the Lion Air 737 Max-8 crash in Indonesia last year.
The Dow Jones Industrial Average is a price-weighted average, and it just so happens that Boeing is its highest-priced component, which means it is going to have some outsized influence on its performance. Shares of Apple (AAPL) will provide a slight offset, as they are up 1.6% following a Bank of America/Merrill Lynch upgrade to Buy from Neutral.
The upgrade of Apple, coupled with a Nomura upgrade of Facebook (FB) to Buy from Neutral and NVIDIA's (NVDA) announcement that it will be acquiring Mellanox Technologies (MLNX) for close to $7 billion, or $125.00 per share, in cash, have helped underpin the market and the Nasdaq 100.
Following the fifth consecutive losing session for the Dow, Nasdaq, and S&P 500 on Friday, we suppose there is an element of support this morning, too, from Fed Chair Powell's admission in a 60 Minutes interview that the Fed is going to be patient with its approach to monetary policy.
Granted that was nothing the market hadn't already heard, yet it was a hug the market needed after getting roughed up last week on some renewed growth concerns.
China for its part reached out with a hug, too, not with a trade deal but with a declaration that its exports through the first nine days of March soared 39.9% year-over-year. That news has mitigated some (but not all) of the worries that were stirred up last week when it was reported China's exports plunged 20.7% year-over-year in February.
Similarly, the January Retail Sales report mitigated some (but not all) of the worries stirred up by the remarkably weak showing for retail sales in December.
In January, retail sales increased 0.2% (Briefing.com consensus -0.1%). Excluding autos, they rose 0.9% (Briefing.com consensus +0.2%). The headline strength in January, however, was offset some by downward revisions to the prior month that indicated retail sales fell 1.6% in December (prior -1.2%) and declined 2.1% excluding autos (prior -1.8%).
The key takeaway from the report is that core retail sales, which exclude auto, gasoline station, building materials, and food services and drinking places sales, increased a solid 1.1%. That component factors into the goods component for personal consumption expenditures, so it will likely prompt some upgrades to Q1 GDP forecasts.
The futures market didn't alter its course much following the release of the data and neither did the Treasury market, which was already showing modest losses. The 10-yr yield is currently up one basis point to 2.64%.
Get ready, then, for a mixed start for the major indices and a higher start for "the market."