There is a fog hanging over the futures market this morning which has the cash market on course for a modestly lower start. The S&P futures are down seven points, the Nasdaq 100 futures are down 10 points, and the Dow Jones Industrial Average futures are down 53 points.
This fog, however, could just be a marine layer, which is Mother Nature's head fake every day for Southern Californians. Time will soon tell, yet this stock market often sees the fog give way to a blue sky as the day progresses.
For the time being, don't expect much sunshine when the opening bell rings.
Buyers are showing little conviction at the index level, which has become commonplace of late as valuation concerns and the uncertain business of tax reform efforts have slowed the market's upward momentum.
When a big move is made these days, it is often at the individual stock level. A case in point is Advanced Auto Parts (AAP), which is up 14% in pre-market action after the auto parts retailers impressed with its third quarter results.
Dow component Home Depot (HD) did the same, and also raised its fiscal 2017 sales and earnings per share growth outlook, yet it is little changed in pre-market trading.
The element of positive surprise for HD, which is up 23% year-to-date, wasn't nearly as strong though as the element of positive surprise for AAP, which is down 51% year-to-date. The disparate responses to good earnings news capture investors' willingness at this juncture to embrace turnaround trades with potentially more upside over many of the favored growth names that have already enjoyed strong runs.
Accordingly, there isn't as much impact at the index level with those positive responses since they often revolve around stocks with lower market capitalizations.
In other developments, the M&A wheel is spinning again. Today's featured news on that front is an unconfirmed report that Roark Capital has made an offer to acquire Buffalo Wild Wings (BWLD) for more than $150 per share.
The latter news should keep the consumer discretionary sector in play, as it flows on the heels of yesterday's news that Hasbro (HAS) is eyeing a potential acquisition of Mattel (MAT).
The fun and games on the economic front has been limited today. The key items market participants are taking stock of include some softer than expected fixed asset investment, industrial production, and retail sales data out of China and Producer Price Index (PPI) data out of the U.S. that was higher than expected.
The October PPI report revealed a 0.4% increase in the index for final demand (Briefing.com consensus +0.1%) and a 0.4% increase in the index for final demand less foods and energy, also known as "core PPI" (Briefing.com consensus +0.2%).
A 0.5% increase in the index for final demand services and a 0.3% increase in the index for final demand goods drove the headline surprises. On a year-over-year basis, the index for final demand is up 2.8% -- the largest 12-month increase since February 2012 -- while core PPI is up 2.4% versus 2.2% for the 12 months ended in September.
The key takeaway from the report is that it will create some angst about possible pass-through effects on consumer prices and will help solidify expectations for a December rate hike from the Federal Reserve.