It's becoming a familiar sight to see little change in the S&P 500, which is a reflection of the market being in a drift mode as it awaits some clarification on several important items that have ratcheted up the sense of uncertainty.
Those featured items include:
- The release of the minutes from March 14-15 FOMC meeting at 2:00 p.m. ET today and the desire to see what views were shared about the strategy of using balance sheet management as a policy tool
- The April 6-7 meeting between President Trump and Chinese President Xi Jinping
- The legislative agenda and the current lack of agreement within the GOP, not to mention across Congress, over health care reform and tax reform efforts. Additionally, there is a partisan divide over Supreme Court nominee Neil Gorsuch.
- The rising level of geopolitical angst regarding North Korea, which reportedly test-fired a ballistic missile into the sea off its coast on Wednesday, drawing a terse-minded response from U.S. officials
- The market's lackluster disposition of late, which has featured the underperformance of the bank stocks and the domestically-oriented Russell 2000
- Misgivings about the outcome of the upcoming French presidential election, which some see as a potential threat to the existence of the European Union; and
- The recognition that "hard" economic data and the yield curve have been contradicting the "soft" data
There is a lot to consider, and while uncertainty is a constant, it feels more heightened at this juncture, which is making participants think more about stretched valuations and the potential for downside risk in the event things don't unfold in a favorable manner.
Even so, participants are not giving up on this market. That point rings true in the understanding that the market is moving laterally these days versus any straight-line depreciation. To wit, the S&P 500 closed Tuesday at 2360.16 or roughly two points higher than where it closed on February 22.
The S&P 500 is indicated to open higher today, too, with the S&P futures trading 0.3% above fair value.
The market is hanging in there again this morning, aided by rising oil prices ($51.69, +$0.66, +1.3%), a $7.5 billion buyout offer for Panera Bread (PNRA), which is a robust 30% premium to its 30-day volume-weighted average stock price as of March 31, and an impressive ADP Employment Change Report for March.
The latter was uplifting from the standpoint that it revealed 263,000 jobs were added to private-sector payrolls in March, which was much higher than the Briefing.com consensus estimate of 175,000. Moreover, the job gains were broad-based, highlighted by an 82,000 increase in the goods-producing sector that featured a 49,000 increase in construction jobs and a 30,000 increase in manufacturing jobs.
There was some concern ahead of the report that late winter weather in March might repress job growth, yet that clearly wasn't the case and this report will help boost nonfarm payroll growth expectations for Friday's Employment Situation Report.
Importantly, this report was derived from actual payroll data from ADP's clients, making it an encouraging piece of hard data that helps support the idea that economic growth should be improving.
The ISM Non-Manufacturing Index (Briefing.com consensus 57.0; prior 57.6) will be released at 10:00 a.m. ET. That's not expected to be a big market-mover. Then again, not much has been over the last six weeks that has seen elevated stock prices bump into an elevated sense of uncertainty.