Participants are waiting on some key happenings, namely today's FOMC decision and any notion that makes it sound as if the GOP can get a tax bill approved before Christmas.
The FOMC decision doesn't hold any intrigue for the market, as the committee is expected to raise the target range for the fed funds rate by 25 basis points to 1.25% to 1.50%. Where the intrigue lays is in the accompany projections for economic growth and the interest rate path.
The prior projections offered in September revealed an expectation for three rate hikes in 2018. What everyone is anxious to see is if that remains the case today or whether enough views have changed to incorporate projections for a fourth rate hike in 2018.
The FOMC decision will be announced at 2:00 p.m. ET. Fed Chair Yellen will follow at 2:30 p.m. ET in her final FOMC press conference as Fed Chair to explain the decision and projections.
Meanwhile, the wait for a tax bill continues -- and it got a little more intriguing with the news that Democrat Doug Jones defeated Republican Roy Moore in Alabama's tight Senate race. Moore has yet to concede defeat, yet President Trump has already congratulated Jones on the victory and political experts have said a vote recount is unlikely.
Some new compromise proposals for tax reform, like lowering the corporate tax rate to 21% instead of 20%, have been floated in the press, yet it's all a parlor game right now as conference committee members are trying to find a way to appease all GOP members in the Senate to secure any bill's passage with a simple majority.
Accordingly, one can't take for granted that any proposal has been cemented as the tax reform order until the final bill arrives on the president's desk.
The Senate can only afford two 'no' votes from GOP members, but with the Jones victory, that margin will be reduced to one in 2018. There is a belief today, then, that the Jones win will spur an even more urgent push by the GOP to get a tax bill compromise worked out before Christmas.
If a tax deal doesn't get done before then, and the work spills over to 2018, the possibility increases that a tax deal doesn't get done.
The latter would be a bad outcome for the stock market, but to be clear, the stock market still isn't living in fear of that outcome. To that end, the futures market would be down big this morning if market participants felt strongly the Jones victory truly imperiled a tax reform deal getting done.
That mindset could change the longer things drag on, yet it's not a mindset prevailing at this moment.
The S&P futures are up three points, the Nasdaq 100 futures are up 24 points, and the Dow Jones Industrial Average futures are up 19 points.
In the same vein, a mindset that connotes worries about consumer inflation isn't prevailing either. That is evident in the Treasury market following the release of the Consumer Price Index (CPI) for November.
Total CPI increased 0.4%, as expected, while core CPI, which excludes food and energy, increased a smaller-than-expected 0.1% (Briefing.com consensus +0.2%).
The energy index increased 3.9% and accounted for about three-fourths of the increase in total CPI. A 0.2% increase in the shelter index helped push up core CPI, but declines in the indexes for apparel, airline fares, and household furnishings helped keep core price pressures in check.
On a year-over-year basis, total CPI was up 2.2%, versus 2.0% for the 12 months ending in October. Core CPI, however, decelerated to 1.7% from 1.8% for the 12 months ending in October.
The key takeaway from the report is that it didn't signal any alarming consumer inflation pressures, which will leave market participants predisposed to think that the Federal Reserve is apt to continue following a gradual tightening path.
The yield on the 2-yr note, which is more sensitive to changes in the fed funds rate, dropped from 1.85% prior to the report's release to 1.80% after its release. The 10-yr note yield went from 2.42% to 2.37%.
Once again, there isn't any corporate news of note having undue influence on the futures market, which continues to be guided by an absence of sellers.
The opening gains might be modest in scope, yet they are rooted in the big ideas that have gotten the stock market to this point in 2017: the persistence of low interest rates, low inflation, solid earnings growth, and tax reform optimism.