In an unfamiliar scene, each of the major indices suffered losses in excess of 1.0% on Thursday. The Dow Jones Industrial Average was the lone exception as it dropped only 0.9%. Still, Thursday was a day that was accented with a negative bias.
That negativity was pinned by most sources on the concerns surrounding the escalating war of words between the U.S. and North Korea, yet we maintain that war of words simply led to a battle with the belief that investor complacency had gotten too high and that a pullback of some kind for an overstretched market was in order.
In other words, the North Korean situation triggered some de-risking that was probably bound to happen anyway, yet in a market that was looking starved for "new" news, it was easy to serve that headline dish cold.
Buying interest for the most part stopped cold early Thursday and it cooled even further as the session wore on after President Trump fired another verbal shot, noting his prior remark about potentially unleashing fire and fury on North Korea may not have been tough enough.
This morning, however, buyers are finding a little appetite again. The S&P futures are up two points, the Nasdaq 100 futures are up four points, and the Dow Jones industrial Average futures are up 11 points. It isn't much, yet it's something to suggest there won't be follow-through selling at the open.
It also suggests that the headline shock value pertaining to the U.S.-North Korea standoff is starting to dissipate, which is to say actual action will now speak much louder than words.
Nevertheless, with the massive 44% spike in the CBOE Volatility Index yesterday, there is certainly some trepidation about near-term trading conditions and the potential for further downside. That consideration will leave participants casting a watchful eye on whether there is a concerted buy-the-dip effort today or a failed effort to rebound.
How the market opens today, then, won't be as meaningful as how it closes.
The Consumer Price Index (CPI) report for July helped lend a measure of support, but only because it didn't trigger any concerns about the Federal Reserve raising the fed funds rate soon.
The all items index increased 0.1% (Briefing.com consensus 0.2%) while the all items index less food and energy (core CPI) also increased 0.1% (Briefing.com consensus 0.2%). Those monthly readings were below expectations and left the all items index up 1.7% year-over-year, versus 1.6% in June, and the all items index less food and energy up 1.7%, unchanged from June.
The Fed will like that there wasn't any further deterioration in consumer inflation trends, yet with its preferred PCE Price Index up just 1.4% year-over-year in June, today's CPI report isn't going to change the prevailing belief that the Fed will want to take more time to determine if inflation is picking up toward its 2.0% target on a sustained basis.
The 2-yr note yield is down three basis points to 1.31%.
In other developments, there have been some high-profile earnings reports from NVIDIA (NVDA), Nordstrom (JWN), Snap (SNAP), and J.C. Penney (JCP). Shares of NVDA, SNAP, and JCP are getting hit hard following the reports while JWN is clinging to a modest gain.
The gist of things is that the earnings news isn't helping rebound matters all that much.