Take a look at the futures market and then do your best to try and ignore it. The trading action there so far this morning has been volatile.
At their lows, the Dow Jones Industrial Average, Nasdaq 100, and S&P 500 futures were down 222, 64, and 22 points, respectively. Currently, they are up 133, 43, and 14 points, respectively, which leaves them only slightly above fair value.
The key consideration is that there hasn't been a specific news catalyst driving the turnaround.
Some might try to give attribution to the better than expected earnings report from Twitter (TWTR), which has that stock soaring 25% in pre-market action; however, Twitter sports a market cap of just $19.0 billion, meaning it has neither the weight nor the institutional shareholder base to move the market.
There has been a load of earnings reports since yesterday's close. Consistent with the fourth quarter reporting trend so far, the vast majority of them have been better than expected.
The latter is an encouraging development that can help contribute to the healing process in the stock market following Monday's drubbing, yet it isn't the elixir at this juncture for the broader market knowing it got another dose of bad medicine heading into yesterday's close.
Briefly, what had been shaping up to be a positive day evaporated in an instant as the major indices sunk abruptly in unison in the final twenty minutes of trading.
That type of trading action underscored the lack of conviction that still exists in the market, which is a byproduct of the market's stunning behavior since last Friday.
So, as one spies the spirited recovery effort in the futures market this morning, it would behoove them to keep an eye on the Treasury market as well.
Market rates moved up yesterday as word of a two-year budget agreement in the Senate, which raises the spending caps on defense and non-defense programs, and provides increased disaster relief funding, stoked growing concerns about a growing budget deficit and national debt.
There was also a weak 10-yr note auction that added to the selling interest. Today, there is a $16 billion 30-yr bond auction.
The House and Senate are expected to vote today/tonight on a measure that will avert another government shutdown, but the "good news" there has opened the door to be cast as a negative given the related deficit concerns that are being spawned by the increased spending.
The yield on the 10-yr note is up two basis points to 2.86%, yet if it keeps edging higher today, don't be surprised if the current optimism in the futures market gets unwound in the cash market after the open.
Today's initial claims report provided a basis to keep the Treasury market on edge about future rate hikes. It showed initial claims decreased by 9,000 to 221,000 for the week ending February 3 (Briefing.com consensus 234,000), which dropped the four-week moving average (224,500) to its lowest level since March 10, 1973.
Continuing claims for the week ending January 27 decreased by 33,000 to 1.923 million.
In other economic developments, China's Trade Balance Report for January was an attention grabber, as it showed imports surging 36.9% year-over-year and exports increasing 11.1%. The import surge was attributed to Lunar New Year timing and higher commodity prices that hit home with increased oil imports.
Generally speaking, though, the trade report from China was a reflection of increased global economic activity.
Separately, the Bank of England voted unanimously to keep its key policy rate and asset purchase program unchanged at 0.5% and £435 bln. That was expected. The policy statement, however, laid the groundwork for future rate hikes, which has driven sterling up 1.1% against the dollar to 1.4031.
Alas, whether things are "sterling" for the stock market when the closing bell rings today remains to be seen. Interest rates, though, will likely play a role in the final determination.