A record close for the Nasdaq... the S&P 500 climbing back above its 50-day simple moving average on a closing basis.... the S&P 500 financial sector gaining 2.2%... the CBOE Volatility Index plunging 25.9%. Those were just some of the headline highlights for the stock market on Monday, which rallied following the French election result.
It was a market that was a joy to behold for investors. For traders, however, it was pretty much a lousy market.
The S&P 500 gapped up to 2370.33 at the open and closed at 2374.15, meaning there was a tight trading range for anyone trying to play the market after the open. Traders like to see volatility, which is why there wasn't much that was likable about Monday's move.
It remains to be seen what trading opportunities will avail themselves today, yet the stage looks set for an extension of yesterday's gains.
The S&P futures are up seven points and are trading 0.3% above fair value. The more notable action, though, is in the Dow futures, which are up 151 points thanks in large part to a 6.6% gain in shares of Caterpillar (CAT) following an impressive earnings report from the industrial giant that was replete with a big, upside earnings surprise and upside guidance for fiscal 2017.
Caterpillar has headlined a long list of companies reporting their March quarter results since yesterday's close, most of which have been better than expected (per usual).
Biogen Idec (BIIB), 3M (MMM), Alcoa (AA), DuPont (DD), Corning (GLW), and McDonald's (MCD) are among the luminaries that have topped expectations and are seeing upside price action in their stocks in pre-market trading.
The timing of their positive earnings surprises is quite good. Not only does it come on the heels of Monday's rally effort, it also comes at a time when the political headlines have a relatively positive hue.
To wit, the worst-case election scenario in France was avoided, President Trump is advocating for a cut in the corporate tax rate to 15%, and press reports suggest the president might be amenable to holding off on his request for border wall funding until September, which is something that could possible help avoid a government shutdown this week.
In effect, then, the macro and the micro are tying up today in a constructive fashion, yet it isn't all rainbows and unicorns.
The issue of North Korea remains a wild card, the Trump administration has moved today to impose a 20% tariff on imports of Canadian lumber that is used for homebuilding in the U.S., and the tax reform effort is shaping up to be a dog fight as news circulates that the White House is okay with a reform plan that might add to the deficit.
For the time being, the market's focus is on the positives and not the negatives. That is the inference that can be drawn from the futures market this morning, which is pointing to a higher start for the cash market.
Today's economic data includes the Case-Shiller Home Price Index and FHFA Houisng Price Index reports for February. They will be released at 9:00 a.m. ET and will be followed by the New Home Sales Report for March (Briefing.com consensus 590,000) and the Consumer Confidence Report for April (Briefing.com consensus 122.3) at 10:00 a.m. ET.