Several news humps were cleared yesterday. The major indices scored modest gains, supported by reminders from the latest ECB policy meeting and minutes from the last FOMC meeting that policy rates aren't going up anytime soon. Now that those news humps have been cleared, there is a hurdle ahead in the 2900 level for the S&P 500.
The current futures indication suggests the S&P 500 will continue on a path toward that hurdle, albeit in a relatively reserved way. The S&P 500 futures are up one point and are trading 0.1% above fair value.
There isn't a lot of momentum behind the Nasdaq 100 futures or Dow Jones Industrial Average futures either. They are little changed and are also trading 0.1% above fair value.
What's notable (and noticeable) is that there still isn't any strong selling interest in the S&P 500, which is up 1.9% month-to-date and 15.2% year-to-date. For the record, the numbers look even better for the Nasdaq Composite (+3.0%/+20.0%), Russell 2000 (+2.7%/+17.3%), and S&P Midcap 400 Index (+2.6%/+17.0%).
The bulls have control of this market and won't give it up easily until the price action works against them. That might sound trite, yet it's a trading axiom that the trend is your friend until it isn't.
The latter is why there is some keen interest in the ability of the S&P 500 to clear 2900 on a closing basis, as that is viewed as the gateway toward making a run at the all-time-high.
Fittingly, the official start of the first quarter earnings-reporting period is right around the corner and will provide a trigger for the next leg in the trading action, either up or down.
The market doesn't have a lot of legs under it at the moment, partly because it is in a resting phase following a big run and partly because it knows there is a big event -- earnings season -- coming up.
In the meantime, it has been watchful of today's news items, but not altogether responsive from a broad market standpoint.
It sees that there was a conditional agreement to extend the Brexit date to October 31; it sees that Tesla (TSLA) is trading 3.4% lower on news that the company and Panasonic have suspended plans for a Gigafactory expansion, raising questions about end demand; and it sees some data out of the U.S. that suggests the economic expansion still has room to run.
Specifically, initial claims for the week ending April 6 decreased by 8,000 to 196,000 (Briefing.com consensus 215,000), which is the lowest level since October 3, 1969, and dropped the four-week moving average (207,000) to its lowest level since December 6, 1969! Continuing claims for the week ending March 30 fell by 13,000 to 1.713 million.
The key takeaway from this leading-indicator report is that it clearly shows employers are reluctant to let go of employees, either because they can't find other qualified workers or because they see demand being strong enough to justify the size of their existing work force.
The Producer Price Index for final demand, meanwhile, increased 0.6% in March (Briefing.com consensus +0.3%), bolstered predominately by a pickup in energy prices. The index for final demand, excluding food and energy, was up 0.3% (Briefing.com consensus +0.2%).
The year-over-year increase in the index for final demand was 2.2%, up from 1.9% in February. For core PPI, the year-over-year increase was 2.4%, down from 2.5% in February.
The key takeaway from the report is that producer prices were up noticeably in March, yet there won't be any alarming read through for market participants at this juncture who are cognizant that yesterday's Consumer Price Index for March showed a moderation in the year-over-year increase for core CPI.