"Growth concerns" are dominating the headlines when it comes to excuses for why the futures market is weak this morning. It's understandable in the sense that the growth issues being discussed have provided a little reality check on the unbridled rally that has transpired for four straight weeks, resulting in a 13.6% gain for the S&P 500 since the December 24 low.
It is necessary to talk about how far the market has come in such a short time, because it exposes the fact that the futures might have been weak this morning regardless of the headlines.
It is overbought and due for a pullback. Where have you heard that before, only to see the market keep pressing higher?
Regular readers know they have heard that before right here, which is to say they have heard us crying wolf. Cry wolf long enough, though, and you'll eventually see a wolf.
There will be a sighting this morning.
The S&P futures are down 18 points and are trading 0.7% below fair value. The Nasdaq 100 futures are down 52 points and are trading 0.8% below fair value. The Dow Jones Industrial Average futures are down 159 points and are 0.6% below fair value.
That's not exactly howling at the moon after such a big gain, yet it sets the stage for a lower start for the cash market.
The "growth concerns" referenced above stem from China reporting a 6.6% GDP growth rate for 2018 that was the lowest since 1990 and the IMF cutting its 2019 and 2020 global growth forecasts to 3.5% and 3.6%, respectively, from its October forecast of 3.7% for both years.
For good measure, worries about Brexit, the ongoing government shutdown here, trade tension with China, and more cautious-minded commentary out of the World Economic Forum in Davos have also factored into this morning's headline mix regarding growth concerns.
The macro matters have overshadowed this morning's earnings reporting, which has featured Dow component Johnson & Johnson (JNJ) beating estimates and guiding FY19 EPS in-line, and fellow Dow component Travelers (TRV) coming up shy of fourth quarter estimates.
Sticking with the Dow, Nike (NKE) was upgraded to Outperform from Market Perform at Cowen.
Nike is indicated modestly higher, yet that isn't making much of a difference in the grand futures trading scheme this morning.
Separately, Arconic (ARNC) is standing out as a story stock after the company said its Board has decided not to pursue a sale of the company since it did not receive a proposal for a full-company transaction. Shares of ARNC are down 25% in pre-market trading with the speculative takeover bid quickly being drained from the stock price.
How much is drained from the stock market today remains to be seen, if anything ultimately ends up being drained.
The propensity to buy intraday weakness has been strong this year, so it certainly can't be ruled out as a possibility today, even with the wolves circling the wagon ahead of the open.