There has been some roller-coaster trading action in the futures market today, which is on a downhill segment of the ride right now.
The S&P futures are down 10 points and are trading 0.3% below fair value, yet they had been up two points a short time ago. The Nasdaq 100 futures are down 34 points (but had been up 40 points) while the Dow Jones Industrial Average futures are down 145 points (but had been up 106 points).
The indecisive behavior is perhaps little surprise in light of how yesterday's market action unfolded, providing the thrill of victory in an early rally effort and the agony of defeat in a subsequent sell-off that pushed the major indices into red figures by the closing bell.
Wednesday's reversal left the Dow Jones Industrial Average below its 200-day moving average, the S&P 500 below its 50-day moving average, the Nasdaq Composite sitting on top of its 50-day moving average, and the Russell 2000 closing in on its 50-day moving average.
In other words, there were some technical breakdowns and some technical takedowns that have market participants anxious about the possibility of the major indices continuing their slide in the near term.
Trade concerns will catch much of the blame for that anxiousness, even if there aren't any jarring headlines this morning to account for the negative disposition. Rather, there is the same stick of tariffs potentially getting imposed and the same carrot of potentially getting things worked out.
Things could go either way, and the uncertainty of it all is compelling some profit-taking interest at the end of the quarter that has made for a tough week so far for the broader market.
Entering today's trade, the S&P 500 is down 2.0% for the week, the Nasdaq Composite is down 3.2%, the Russell 2000 is down 2.7%, and the Dow Jones Industrial Average is down 1.9%.
Basically, the S&P 500 is smack dab in the middle of the 2600-2800 trading range it has been locked for the better part of the last four months.
It won't break out of that range today. The question is, will it just keep breaking lower like it has so far this week?
The performance of the information technology and financial sectors will have some important sway in answering that question. The former has been the market's security blanket all year while the latter has simply been a wet blanket.
Yesterday marked the 13th straight decline for the financial sector, which is down 2.7% this week and 5.6% year-to-date, tracking what has been an unrelenting flattening of the yield curve.
The performance of the financial sector, then, is certain to remain a focal point today. The understanding that the Federal Reserve will be releasing the results from its Comprehensive Capital Analysis and Review (CCAR) after today's close is another reason why the financials will be in focus as the CCAR is the opening for the financials to boost their capital return programs.
Aside from that, the drug stores are going to be a hotbed of trading activity. That is owed in part to Walgreens Boots Alliance (WBA) reporting earnings results that contained some disappointing same-store sale, yet it will be mostly owed to the news that Amazon.com (AMZN) is buying online pharmacy PillPack.
Shares of WBA are down and CVS Health (CVS) are both down 9% and 8%, respectively, in pre-market trading.
In other developments, the third estimate for Q1 GDP contained a downward revision to 2.0% (Briefing.com consensus 2.2%) from the second estimate of 2.2%, as downward revisions to private inventory investment and personal consumption expenditures weighed. The GDP Deflator was revised up to 2.2% (Briefing.com consensus 1.9%) from 1.9%.
The key takeaway from the report is that personal spending was weak in the first quarter, yet the relevant takeaway today is that this is a dated number and a pickup in personal spending is a key reason why many Q2 GDP forecasts have a four-handle on them.
Initial claims for the week ending June 23 increased by 9,000 to 227,000 (Briefing.com consensus 220,000). Continuing claims for the week ending June 16 decreased by 21,000 to 1.705 million.
Overall, there was no change in the encouraging trends for both initial and continuing claims.