There isn't going to be any shortage of news drivers today. The ECB meeting has been held, the UK election is being held, and the testimony of former FBI Director Comey before the Senate Intelligence Committee will be held at 10:00 a.m. ET. With that understanding, the S&P futures are holding a position in positive territory, up one point and trading 0.1% above fair value.
Much ground will be covered, then, by the time the closing bell rings today. Still, it is uncertain if the stock market will be moved much by any of it, partly because there have been some preconceived notions about what all of it might produce.
In a nutshell:
- The ECB was expected to sound a little less dovish and it held true to that expectation. While it maintained its corridor of interest rates at prior levels, the ECB dropped the language from its statement that suggested rates could be cut further.
- The Conservative Party is expected to prevail in the UK election, winning a majority of parliamentary seats, except that majority isn't expected to be as wide as many pundits thought it might be when Prime Minister May called for the early election in April. The polls won't close until 5:00 p.m. ET, so if there are any major surprises from the election, they may not be accounted for in the market until Friday.
- Former FBI Director Comey released his prepared statement on Wednesday. In the important respects, it followed form with the revelations made in The New York Times article from May 17, revealing the remark from the president that he hoped Mr. Comey could let go of the investigation of Michael Flynn while also confirming the president's claim that he was informed that he wasn't under any personal investigation. Today's hearing will produce more information, although the market is inclined to think Mr. Comey will stop short of concluding the president obstructed justice, leaving committee members to draw their own conclusions on the matter.
ECB President Draghi's press conference is currently taking place. He acknowledged that risks to the outlook are now broadly balanced and that the eurozone economy is expected to expand at a somewhat faster pace than originally considered, yet he also noted that inflation remains low and has yet to show a convincing pickup.
The latter view was backed up by a downgrade of the inflation forecast for the 2017-2019 period, which a Bloomberg report yesterday suggested was likely to be the case.
Accordingly, even though the statement was less dovish sounding, and even though the growth assessment was improved, the euro is losing ground against the dollar as market participants recognize the ECB is beholden to the single inflation mandate. In other words, the dovish monetary policy is expected to remain intact for some time yet, which is a divergent stance from the one the Federal Reserve is taking.
Today's initial claims report only served to reinforce the divergent paths. Initial claims for the week ending June 3 decreased by 10,000 to 245,000 (Briefing.com consensus 240,000) while continuing claims for the week ending May 27 decreased by 2,000 to 1.917 million.
The latest report marked the 118th straight week that initial claims have been below 300,000; meanwhile, it left the four-week moving average of 1.915 million for continuing claims at its lowest level since January 12, 1974.
In other developments, China's trade balance report for May showed imports rising 14.8% year-over-year and exports rising 8.7% year-over-year. It has been viewed as an encouraging indication for global growth, with the jump in imports in particular mitigating some of the slowdown concerns that have been hanging over China.
There haven't been any corporate news items of market-moving note. Oil prices, though, continue to act as a drag on the broader market. They are down 0.9% this morning to $45.30 per barrel as supply concerns persist. The drop in prices will be seen as a negative for the energy sector.
The latter wasn't a major problem for the S&P 500 on Wednesday because it had the relative strength of the financial and technology sectors to back it up. Traders will be interested to see if that dynamic plays out again today.