The stock market is set to open higher as the S&P futures are trading up four points, leaving them 0.1% above fair value. It's a striking indication if for no other reason than the understanding that both Facebook (FB) and Tesla (TSLA) are trading lower in pre-market action following their latest earnings reports.
Their losses are not material, especially in light of the run those stocks have been on, but for various reasons, the market isn't getting weighed down by their negative disposition like it did yesterday with Apple (AAPL) experiencing some profit taking after its report.
The offsets, so to speak, involve the conclusion that last night's French presidential debate didn't upset the consensus view that pro-EU candidate Emmanuel Macron will win Sunday's vote and the word from Capitol Hill that the House is going to vote on a health care bill today.
The latter is perhaps the real spark since the vote, reportedly, wouldn't happen unless the GOP leadership felt confident it had the votes to win passage. To the bigger point, though, there is some hope wrapped up in the notion that the approval of the House bill bolsters the chances at achieving tax reform and that perhaps tax reform won't be as costly as some fear it will be.
The key thing to remember, though, is that the bill's passage in the House only means it will then be taken up by the Senate for consideration. That is, passage today, should it happen, does not make the repeal and replacement of Obamacare a done deal.
Even so, the impression will be made that the health care reform effort is progressing, which is a hopeful consideration for the tax reform effort doing the same.
The element of "sameness" was evident in this morning's economic data. To that end, first quarter productivity was weak, the trade deficit was little changed in March, and weekly initial claims continued to run at very low levels.
The productivity number was a bit stunning frankly. Nonfarm business sector labor productivity decreased at a 0.6% annual rate (Briefing.com consensus +0.1%) in the first quarter on the heels of an upwardly revised 1.8% increase (from +1.3%) in the fourth quarter. On a year-over-year basis, productivity increased 1.1%.
Unit labor costs, meanwhile, jumped 3.0% in the first quarter (Briefing.com consensus +2.6%) following a downwardly revised 1.3% increase (from +1.7%) in the fourth quarter.
The key takeaway from the report is that productivity is weak, which is an important point since weak productivity gets in the way of a rising standard of living.
With respect to the weekly jobless claims report, it showed initial claims decreasing by 19,000 to 238,000 (Briefing.com consensus 246,000) for the week ending April 29 and continuing claims decreasing by 23,000 to 1.964 million for the week ending April 22, marking the lowest level for continuing claims since April 15, 2000.
The four-week moving average of 1,989,250 for continuing claims is the lowest since November 26, 1988.
The key takeaway from the report is that it reflects a continued tightening in the labor market that will underpin hopeful expectations for a continuation of solid hiring activity.
The Trade Balance Report for March showed a narrowing in the deficit to $43.7 billion (Briefing.com consensus -$44.4 billion) from a downwardly revised $43.8 billion (from -$43.6 billion) for February.
March exports of $191.0 billion were $1.7 billion less than February exports while Mach imports of $234.7 billion were $1.7 billion less than February imports.
The key takeaway from the report is that both exports and imports were down, led by decreases in economically-sensitive areas like industrial supplies, autos, and capital goods that spoke to the soft activity seen in the first quarter.
The market of course isn't concentrating on the first quarter, which is why weak data for that period is being largely dismissed. The market is affording itself that sense of assurance because the first quarter earnings reports in aggregate continue to come in quite strong and have been accompanied by generally reassuring guidance.
That has been an important fundamental factor that has helped support the market and which is helping to support it today even without the support for the time being from the likes of Facebook and Tesla.