There has been a flood of earnings news since yesterday's close. Per usual, most of it has been better than expected.
There are too many reports to mention here, but for some flavor, we can tell you that the likes of Facebook (FB), Qualcomm (QCOM), Visa (V), Ford (F), Chipotle Mexican Grill (CMG), General Motors (GM), UPS (UPS), PepsiCo (PEP), Bristol-Myers (BMY), Union Pacific (UNP), ConocoPhillips (COP), and American Airlines (AAL) were among the companies that topped first quarter earnings estimates.
That doesn't mean they are all trading higher. American Airlines, for instance, is down 2.8% after lowering its FY18 outlook due to higher fuel prices. For good measure, Southwest Air Lines (LUV), which also topped expectations, is down 4.3% after providing a disappointing unit revenue outlook for the second quarter.
Every company has its own story, which is why every stock has its own unique reaction to earnings news.
Nevertheless, there is a preponderance of good earnings news and reassuring guidance that has helped underpin the futures market and has helped set the stage for a positive start. The question is, will the curtain ultimately fall on the stage as today's performance unfolds?
There hasn't been a lot of conviction on the part of bulls this week. That's because concerns about rising interest rates, higher commodity prices, and peak earnings growth have curtailed buying interest.
For the time being, interest rates are backing up. The 10-yr yield, which hit 3.03% yesterday, is at 2.99% this morning. That has provided a modest reprieve that has facilitated some buy-the-dip interest in association with the good earnings news.
Still, there isn't a sense of unbridled enthusiasm in pre-market action. The S&P futures are up nine points and are trading 0.5% above fair value. The Dow Jones Industrial Average futures are up only 53 points, which places them 0.3% above fair value.
Where there is some zest is in the Nasdaq 100 futures. They are up 58 points and are trading 1.5% above fair value, bolstered by a 7.1% gain in shares of Facebook. Look for the information technology sector, then, to provide some influential support for the broader market in the early going.
At the same time, keep a close watch on Apple (AAPL) and the semiconductor space. Samsung Electronics is the latest company to come out and warn of weak smartphone demand. AAPL is up 0.4% in pre-market action, which means it isn't exhibiting relative strength. If it rolls back, and supplier stocks follow, the information technology sector's support of the broader market is apt to weaken.
The opening tick, though, will fall in favor of the bulls who are also digesting a batch of economic data and an unsurprising announcement from the ECB that it elected to leave its policy rates and asset purchase program unchanged.
Today's data featured the initial claims, durable orders, and advance international trade in goods reports. They were reasonably good from a headline perspective, yet the durable orders report did have some holes in it.
To wit, durable orders for March increased 2.6% (Briefing.com consensus +1.9%). Excluding transportation, though, orders were flat (Briefing.com consensus +0.6%).
The key takeaway from the report was that business spending was soft, evidenced by a 0.1% decline in orders of nondefense capital goods excluding aircraft. Shipments of those goods, which factor into GDP forecasts, were down 0.7% after increasing 1.0% in February.
There were no holes in the initial claims data, It was undeniably strong.
Initial claims for the week ending April 21 decreased by 24,000 to 209,000, which was the lowest level of initial claims since December 6, 1969. Continuing claims for the week ending April 14 decreased by 29,000 to 1.837 million. That dropped the four-week moving for continuing claims to 1,849,750, which is the lowest level since January 5, 1974.
The key takeaway from the initial claims report is that it will feed concerns about a tightening in labor supply and a potential pickup in wage-based inflation pressure as a result of it.
Separately, the advance international trade in goods report for March showed a narrowing in the deficit to $68.0 billion from $75.9 billion in February. That improvement was driven by exports being $3.4 billion more than February exports and imports being $4.4 billion less than February imports.
The futures market didn't show much reaction to the data, having stayed on a steady course in a bid to try and steady a stock market that has looked unsteady this week.