Today's early activity resembles much of the early activity seen on Wednesday, which is to say it has featured some weakness in the futures market.
Yesterday's modest weakness before the open, however, did not grow into anything more after the open. In fact, the major indices held their ground, turned around, and ended the session with modest gains that led to another round of new record highs.
Market participants have their share of things to focus on this morning:
- North Korea is back to spewing fantastical remarks about sinking Japan and reducing the U.S. to ashes; and reports suggest it might be preparing another missile launch
- Democratic leaders are saying they agreed to protect DACA and to work out a border security package, excluding the wall, that is agreeable to both sides. The White House, though, quickly shot down the contention, noting specifically there was no deal and certainly no agreement to exclude the wall.
- The Bank of England left its key policy rate at 0.25% and its asset purchase program at £435 billion, as expected, but noted that it could potentially raise rates more aggressively than the market expects if the economy keeps evolving as expected
- Tenet Healthcare (THC) is reportedly exploring a possible sale of the company; and
- Homebuilders Lennar (LEN) and Beazer Homes (BZH) have tempered their home delivery outlooks due to the hurricanes
Today's data has been mixed.
Key data out of China -- industrial production, fixed asset investment, and retail sales for August -- was weaker than expected across the board. Separately, the Consumer Price Index and Initial Claims reports from the U.S. were a bit better than expected.
Total CPI increased 0.4% month-over-month in August (Briefing.com consensus +0.3%), bolstered by a 6.3% increase in the gasoline index and a 0.5% jump in the shelter index. Core CPI, which excludes food and energy, rose 0.2%, as expected. It was noted that Hurricane Harvey had a very small effect on survey response rates in August.
On a year-over-year basis, the all items index increased 1.9%, versus 1.7% for the 12 months ending July, while core CPI remained at 1.7% for the fourth month in a row.
The key takeaway from the report is that the year-over-year bump in headline inflation toward the Fed's 2.0% target will prompt the market to consider more carefully the prospect of another rate hike before the end of the year.
Initial claims, meanwhile, decreased by 14,000 to 284,000 (Briefing.com consensus 310,000) for the week ending September 9. Continuing claims for the week ending September 2 decreased by 7,000 to 1.944 million.
The initial claims reading, which was impacted by Hurricanes Harvey and Irma, held below 300,000 for the 132nd straight week.
The key takeaway from the report is that the underlying trend in initial claims remains solid and on point with a tight labor market, evidenced by the unadjusted claims figure, which fell by 36,500 to 214,121.
The futures market weakened in the wake of the data. The S&P futures are down six points and are trading 0.3% below fair value, which is setting the stage for a lower start for the cash market.