Today should be an interesting day of trading. It already is.
The S&P futures are little changed and are pointing to a slightly lower open, which is interesting because the second quarter earnings reports from JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC), and PNC (PNC) have all been released.
Each of those banks topped consensus earnings estimates, with the exception of Wells Fargo. Shares of JPM are up 0.4%, shares of C are down 1.1%, shares of PNC are up 0.2%, and shares of WFC are down 2.4% in pre-market trading.
First, we would caution not to put a lot of stock in the pre-market indications for these bank stocks. Trading volume doesn't run all that deep and there is a lot of information to digest in these reports, such that the initial reactions can be deemed to be somewhat superficial.
The latter point notwithstanding, the relatively immutable response to the reports by the broader market is interesting because the S&P 500 is on the doorstep of 2800, which is the upper end of the trading range (~2600-2800) it has been locked in since early February and which is a level that was met with firm resistance in March and again in June.
There's more at work right now, however, than the earnings reports from the banks.
What's also at work is the chess match market participants are playing at this important psychological level, which many believe will open the door to a run to new record highs if it can be cleared on a closing basis.
Others, meanwhile, think another bout of selling resistance at 2800 could leave the market destined to remain range-bound leading up to the midterm election.
One way or another, it is clear the S&P 500 is at an inflection point at a very influential time -- the start of the second quarter earnings reporting season.
If things track as expected, this should be the second-highest period of quarterly earnings growth since the third quarter of 2010, trailing only the first quarter of this year.
There will be a lot of good earnings news, and, presumably, a fundamental basis to drive the major indices higher. That understanding is why the trading response will be interesting to watch as the earnings season unfolds.
One eye of course will be kept on headlines pertaining to trade matters. Many sources have attributed the big run in the market of late to a belief that the current trade conflict won't evolve into a full-fledged trade war and the relief that China has had a relatively calm response to the trade actions threatened by the U.S.
The trade headlines promise to be a continued source of trading volatility for the time being.
On a related note, there is a buzz this morning about an acknowledgment from President Trump to a British newspaper that the current Brexit blueprint favored by Prime Minister May could get in the way of the U.S. and UK working out a bilateral trade deal following Brexit.
That view has weighed on the British pound and has helped underpin some of the strength seen in the U.S. Dollar Index this morning.
Separately, the Import and Export Price Index Report for June hasn't changed the pre-market tone.
Import prices declined 0.4% in June and were down 0.3% excluding fuel. Export prices were up 0.3% and increased 0.4% excluding agriculture. Like other inflation reports this week, though, the year-over-year changes show an uptick in inflation trends.
Import prices were up 4.3% year-over, versus 1.4% for the 12-month period ending in June 2017, and were up 1.5% excluding fuel, versus up 1.1% for the 12 months ending in June 2017.
Export prices were up 5.3% year-over-year, versus 0.6% for the 12-month period ending in June 2017, and were up 5.4% excluding agriculture, versus up 1.0% for the 12 months ending in June 2017.
The Treasury market has maintained modest gains in the wake of the report, with yields across the curve down one to two basis points, and the equity futures have maintained an otherwise ho-hum disposition.