It isn't Labor Day, but it will be soon, which is why a lot of market participants aren't going to be actual participants in today's trading. With the S&P 500 up 0.9% for the week and 3.0% for the month, plenty of participants will be content with the notion that their work is done until after Labor Day.
What that means is trading volume will be light today, leading perhaps to some moves that might not have been as pronounced in a market that was fully engaged. In other words, be careful not to read too much into the price action today.
For now, the price action is leaning negative.
The S&P futures are down six points and are trading 0.2% below fair value. The Nasdaq 100 futures are down nine points and the Dow Jones Industrial Average futures are down 64 points.
Apple (AAPL), which is up 18.3% this month, is trading 0.5% higher in pre-market action. There isn't a specific news catalyst behind that move, yet we thought it was worth mentioning because (a) Apple is such a widely-owned stock (b) it is the largest stock by market capitalization and (c) Apple is the signpost for how well the broader market has done this month.
The relative strength in Apple this morning is helping to curtail the negative disposition of the futures market, which is being attributed to several influences, including month-end selling activity after a big run, continued weakness in emerging market currencies, and underlying trade angst.
The latter is tied up in various understandings:
- Canada and the U.S. have yet to announce an agreement in principle on a new NAFTA deal. The market is waiting anxiously for this to happen, because the lack of an agreement would jeopardize Congressional approval of the agreement reached earlier in the week with Mexico and raise the risk of an expanding trade war.
- It became known yesterday that President Trump seems inclined to implement a tariff on $200 billion of Chinese imports as early as next week, which would ratchet up trade tensions between the two countries.
- There is some renewed tension on the EU trade line after President Trump said in a Bloomberg interview that the EU's offer to eliminate auto tariffs does not go far enough and compared the EU's trade policies to those of China.
- In the same Bloomberg interview, the president threatened to withdraw the U.S. from the World Trade Organization (WTO) "if they don't shape up."
These trade matters will dominate much of today's market narrative, although there are some corporate items that will command some attention as well.
In particular, Dow component Coca-Cola (KO) is up 0.2% after announcing a $5.1 billion deal to acquire coffee brand Costa Limited from parent company Whitbread PLC.
Also, lululemon athletica (LULU) is the latest retailer standout after reporting earnings results and issuing encouraging guidance. Shares of LULU are up 10.5% in pre-market action. Conversely, shares of Ulta Beauty (ULTA) are down 2.2% after disappointing third quarter guidance overshadowed a positive second quarter earnings surprise.
Today's economic calendar features the Chicago PMI for August (Briefing.com consensus 63.0; Prior 65.5) at 9:45 ET and the final August reading for the University of Michigan Consumer Sentiment Survey (Briefing.com consensus 95.5; Prior 95.3) at 10:00 a.m. ET.
The U.S. Dollar Index (94.82, +0.09, +0.1%) is tracking modestly higher, as are bond prices, which reflects a bit of a safe-haven bid going into an extended weekend that has already started for a lot of the typical market participants.