The futures market is signaling a higher start for the major indices -- but that is all it is signaling. What comes after that is anyone's guess these days as the trading action has been rather fickle.
Tuesday was a good example. A positive start was quickly met with selling interest that was concentrated on the outperforming technology sector and, eventually, the financial sector as well.
Furthermore, the S&P 500 ran into technical resistance at the 2800 level and the entire market ran into some headline resistance when it was reported that the Trump Administration is contemplating some "steep" tariffs and investment restrictions on China.
The latter news is still in the mix this morning, yet the S&P futures are up nine points and are trading 0.4% above fair value. The Nasdaq 100 futures are up 31 points while the Dow Jones Industrial Average futures are up 115 points.
Ironically, some pleasing industrial production, fixed asset investment, and retail sales data out of China has been held out as a source of futures support. That was the case before 8:30 a.m. ET anyway.
It's still the case after 8:30 a.m. ET, but there is now more to the futures indication story.
The Producer Price Index and Retail Sales reports for February were released at 8:30 a.m. ET. The former was pretty much in-line with estimates while the latter was weaker than expected.
The futures market extended its gains following their release, primarily because the retail sales data disappointed, which has led market participants to think it is another data point that will forestall any leaning by the Federal Reserve toward a fourth rate hike this year.
That might sound anomalous considering there were was an uptick in the year-over-year change in PPI and core PPI, which excludes food and energy, yet that realization was tempered by the recognition that yesterday's Consumer Price Index didn't show any worrisome pass through effects from rising producer prices.
In terms of retail sales, they declined 0.1% (Briefing.com consensus +0.3%) on the heels of an upwardly revised 0.1% decline (from -0.3%) in January. Excluding autos, retail sales rose 0.2% (Briefing.com consensus +0.4%) following an upwardly revised 0.1% increase (from 0.0%) in January.
A 0.9% decline in motor vehicle sales weighed on overall retail sales along with a 1.2% decline in gasoline station sales and a 0.4% decline in general merchandise store sales.
Core retail sales, which exclude auto, gasoline station, building materials, and food services and drinking places sales, were up a modest 0.1%. This component factors into the computation of the goods component for personal consumption expenditures, so it should help keep Q1 GDP growth estimates in check.
The Producer Price Index revealed a 0.2% increase in the index for final demand (Briefing.com consensus +0.1%) and a 0.2% increase in the index for final demand excluding food and energy (Briefing.com consensus +0.2%).
On a year-over-year basis, the index for final demand was up 2.8%, versus 2.7% in January, while the index for final demand excluding food and energy was up 2.5%, versus 2.2% in January.