If nothing else, we know this morning which equity market is the top dog. We don't mean that in a pejorative sense -- even though the U.S. market was a real "dog" on Thursday. Rather, it's a metaphorical extrapolation from the recognition that Asian markets, following Wall Street's lead, got hit hard on Friday and yet the S&P futures are currently up one point.
In that light then, we know it's not the tail wagging the dog. The top dog, however, has some fleas on its back, which are causing some irritation.
The Federal Reserve is operating with a tightening bias, protectionist trade actions (and the threat of them) are on the rise, the two most heavily-weighted sectors in the S&P 500 -- information technology and financials -- have been hit hard this week, and the major indices are looking bad from a technical standpoint.
Earnings growth is still strong, yet market participants are starting to contemplate the prospect of future earnings growth disappointment given the loss of economic momentum seen in the data of late, the Fed's inclination to raise interest rates, and the Trump Administration's bid to shrink the U.S. trade deficit.
Accordingly, the desire to buy into dips has been supplanted by a drive to sell into strength.
We'll see if that remains the case today. The S&P 500 is on track for a flattish open.
That's not a "big" indication, but it's still a notable (and comforting) move for the bulls at this juncture for a few reasons: (1) it reflects a lack of follow-through selling pressure and (2) it has unfolded after China announced its own tariff response to the Trump Administration's tariff plan for Chinese imports.
Briefly, China said it is going to target 128 specific U.S. products, including wine, pork, fresh fruit, ethanol, and steel.
The import value of the targeted products, though, is a mere $3 billion, which is barely a drop in the bucket of the overall value of imported goods to China. Furthermore, the initial list of targets does not include airplanes or soybeans, which were thought to be likely targets in a retaliatory response.
They still could be, but some pundits think they were held out at this juncture to use as leverage in future negotiations. In any case, there is a measure of relief this morning in the idea that China has hit back initially with kid gloves.
That understanding has tempered some of yesterday's trade-related angst and has kept a lid on follow-through selling interest.
The February Durable Goods Orders report has also qualified as a supportive factor this morning. Orders for durable goods increased a stronger than expected 3.1% (Briefing.com consensus +1.5%). Excluding transportation, orders for durable goods rose a stronger than expected 1.2% (Briefing.com consensus +0.6%).
Notably, nondefense capital goods orders excluding aircraft -- a proxy for business spending -- jumped 1.8% on the heels of a 0.4% decline in January. Shipments of these goods, which factor into GDP computations, increased 1.4%.
The key takeaway from the report is that it showed a welcome rebound in business spending that has mitigated some of the nervousness about the loss of economic momentum seen in the data of late.
The New Home Sales report for February (Briefing.com consensus 620,000; prior 593,000) will be released at 10:00 a.m. ET.
That data will provide some trading opportunities along with the latest earnings report from KB Home (KBH) and the earnings results from Micron (MU) and Dow component Nike (NKE).
Still, the market's attention will be fixated on trade headlines and the behavior of the information technology and financial sectors. Those areas have been big irritants that have left market bulls in the dog house this week.
Entering today's session, the S&P 500 is down 3.9% for the week.