It was another cookie-cutter performance by the stock market on Wednesday, which started soft, steadied itself, and then enjoyed a late-afternoon push that produced new record highs for the Dow, the Nasdaq, and the S&P 500.
This morning, another soft open is expected.
The S&P futures are down five points, the Nasdaq 100 futures are down eight points, and the Dow Jones Industrial Average futures are down 22 points.
It was a slow bleed in the futures market overnight without any principal news drivers to account for it. If anything, the negative disposition was rooted in the expectation that the stock market is due for a pullback of some kind from the near-vertical climb it has made since mid-August.
Few groups have climbed as quickly as the S&P 500 financial sector. It is up 7.4% since August 21, which is partly why the response this morning to better than expected earnings results from JPMorgan Chase (JPM) and Citigroup (C) has been muted.
Both banks topped consensus earnings estimates, yet both stocks are little changed in pre-market action. Bank of America (BAC) and Wells Fargo (WFC) will report their quarterly results before the open on Friday.
Some other corporate news of note before today's open includes a third quarter revenue warning from Juniper Networks (JNPR), a tempered third quarter and fourth quarter outlook from AT&T (T), and a dour third quarter warning from women's apparel retailer J. Jill (JILL).
On the economic front, things had a better tone to them in terms of the reflation theme.
The Producer Price Index showed a 0.4% increase in the index for final demand, as expected, and a 0.4% increase in the index for final demand less foods and energy (Briefing.com consensus +0.2%).
Importantly, the BLS said Hurricanes Harvey and Irma had virtually no impact on data collection efforts or survey response rates, and that no changes in estimation procedures were necessary.
The key takeaway from the report is that it will feed the view that the Federal Reserve is on course to raise the fed funds rate again in December.
That view stems from the understanding that the final demand index increased 2.6% for the 12 months ended in September, marking the largest rise since a 2.8% advance for the 12 months ended February 2012. Meanwhile, the final demand index less foods and energy increased 2.2% for the 12 months ended in September versus 2.0% for the 12 months ended in August.
Separately, the initial claims report showed some improvement even though it was impacted by Hurricanes Harvey, Irma, and Maria.
Initial claims for the week ending October 7 decreased by 15,000 to 243,000 (Briefing.com consensus 255,000) while continuing claims for the week ending September 30 decreased by 32,000 to 1.889 million -- the lowest level since December 29, 1973.
The key takeaway from the claims data is that it is consistent with a tight labor market, which some members of the Federal Reserve think poses an upside inflation risk.
The futures market didn't show much reaction to the data, so the cash market remains on track for a modestly lower start. After that, everyone will be watching to see if it gets back on its bullish track and continues to defy calls that it is due for a pullback.