The stock market's pace has been slowed in recent sessions, reined in most likely by the assumption that it is due for a pullback that might be more than fractional in nature. In fact, the S&P 500 has gone nowhere the last two sessions. On Wednesday it declined 0.06%, and on Thursday, it increased 0.06%.
The S&P 500 will do better at the open today. The S&P futures are up nine points and are trading 0.4% above fair value.
That indication may stoke some buying speculation, yet it's worth pointing out that yesterday's opening indication didn't stick. There was some selling into the opening strength.
It's possible that happens again today given all of the attention on technical indicators pointing to a market that is overbought, fundamental narratives drawing attention to stretched valuations, and qualitative observations that investor complacency is excessive.
There is a basis, though, for the stock market to have a winning day.
Intel (INTC) delivered an impressive earnings report and outlook that set an encouraging tone from an earnings perspective. Shares of INTC are indicated to open 6.0% higher.
The report from Starbucks (SBUX), on the other hand, has been tagged as a disappointment as the company's sales failed to live up to expectations. Shares of SBUX are indicated 4.9% lower.
The economic news, meanwhile, was better than it might appear at first blush.
Real GDP increased at an annual rate of 2.6% in the fourth quarter, according to the advance estimate (Briefing.com consensus +2.9%) while the GDP Price Deflator increased 2.4%, as expected.
The headline number was weaker than expected, but it should be noted that real final sales, which excludes the change in inventories, increased 3.2%, which was the strongest growth rate since the second quarter of 2015.
The key takeaway from the report is that consumer spending, which accounts for roughly 70% of GDP, was alive and well in the fourth quarter, increasing 3.8% -- the fastest growth rate since the first quarter of 2015. Moreover, business spending also increased, with spending on equipment increasing 11.4% -- the strongest since the third quarter of 2014.
Net exports acted as the primary drag, subtracting 1.13 percentage points from real GDP growth.
Separately, the durable goods orders report for December showed new orders for durable goods increased 2.9% (Briefing.com consensus +0.9%) on top of an upwardly revised 1.7% increase for November (from +1.3%). Excluding transportation, orders increased 0.6% (Briefing.com consensus +0.7%) following an upwardly revised 0.3% increase for November (from -0.1%).
Nondefense capital good orders excluding aircraft -- a proxy for business investment -- declined 0.3% in December, yet that dip came following a succession of increases in prior months for this metric, so it shouldn't be read as an inflection point in business spending behavior.
The final report of the morning showed a widening in the deficit for international trade in goods to $71.6 billion for December (Briefing.com consensus -$68.5 bln) from $70.0 billion in November. That widening fit with the drag from net exports that was seen in the advance Q4 GDP report.
The futures market didn't show much reaction to the economic data, which is fair given the mixed headline readings. Importantly, though, it didn't sell off as the data in general painted a picture of an economy that is performing better. On that note, real GDP increased 2.3% in 2017 versus 1.5% in 2016.
While the data deluge was hitting, President Trump was speaking in Davos. His main message is that America is open for business, and he also took the occasion to point out how the stock market keeps hitting new record highs.
The S&P 500 is on course to do so again this morning, but it will be the closing level that is the real focal point for market participants wondering if this January run is done.