The air is getting a little thin for the major indices, which have rushed to new record highs in recent weeks. Some time is needed to catch their breath and it looks like the futures market is suggesting that will happen at the open.
Currently, the S&P futures are down two points, the Nasdaq 100 futures are down 11 points, and the Dow Jones Industrial Average futures are down 17 points.
That's not a move, though, that is the equivalent of reaching for an oxygen mask to help with one's breathing. It's more like a breathe-in-through-your-nose and out-through-your-mouth effort to restore one's normal respiration.
The striking thing this morning, then, isn't that the futures are lower. It's that they are hardly lower following a largely unchecked sprint to record highs.
The Russell 2000 is up 11.4% since August 21 while the S&P Midcap 400, Nasdaq Composite, Dow Jones Industrial Average, and S&P 500 are up 7.3%, 5.1%, 4.4%, and 4.3%, respectively, over the same period.
That move has been fueled by a hope that a tax reform plan, which will presumably produce lower corporate tax rates among other things, will be approved soon.
Press reports this morning, however, are highlighting the emerging pushback within the GOP to some of the provisions laid out by the "Big Six" in their tax reform blueprint. That shouldn't be a surprise given the lack of details in the blueprint and think-tank conjecture that the proposals will add to the deficit.
That pushback is being cited for taking some of the wind out of the market's sails this morning, yet that is a convenient excuse since that pushback has been highlighted in prior sessions when the major indices were running to new highs.
The ADP Employment Change report for September hasn't provided much fodder for sellers or buyers this morning. It showed an estimated 135,000 positions (Briefing.com consensus 160,000) were added to private sector payrolls in September following a downwardly revised 228,000 (from 237,000) in August.
That was close enough to the consensus estimate that it will not prompt economists to alter their outlook for the nonfarm payrolls number on Friday. Moreover, market participants are cognizant that there could be a good bit of noise in preliminary employment reports for September given the impact of the hurricanes, so they aren't going to get too stirred up by the headline numbers.
The ISM Services report for September (Briefing.com consensus 55.3; prior 55.3) will be released at 10:00 a.m. ET and will be followed by weekly oil inventory data at 10:30 a.m. ET.
Fed Chair Yellen will be providing opening remarks to a community banking conference in St. Louis at 3:15 p.m. ET. She isn't expected to say anything market moving.
On a related note, Bloomberg is reporting that Gary Cohn, Kevin Warsh, and Jerome Powell are on the president's short list as potential Fed chair nominees. Ms. Yellen hasn't been excluded entirely, yet reports suggest she is not a favorite candidate.
Other news of note this morning includes PepsiCo (PEP) reporting better than expected third quarter earnings, Catalonia's leadership noting it will soon declare independence from Spain, and President Trump asserting that Puerto Rico's debt is going to need to be wiped out in light of the added difficulties the island is experiencing from the devastation created by Hurricane Maria.