Things are looking up for today's open, which is largely a function of last week having been such a downer.
The S&P futures are up 27 points and are trading 0.9% above fair value. The Nasdaq 100 futures are up 90 points and are trading 1.3% above fair value. The Dow Jones Industrial Average futures are up 228 points and are trading 0.9% above fair value.
There are several ostensible factors for the positive bias:
- Government leaders in Italy are reportedly lobbing some overtures about being willing to reduce the controversial 2.4% budget deficit target.
- EU leaders have approved the UK Brexit plan.
- Adobe Analytics has reported that online Black Friday sales surged 23.6% to a record $6.22 billion.
- Participants are hopeful that the G20 meeting between President Trump and President Xi at the end of the week will produce some favorable-sounding trade headlines.
We're calling these "ostensible" factors because they can all easily be refuted as the basis for why the major indices are set to open today's session with hefty gains.
- According to a Bloomberg report, Italy's Deputy Prime Minister Salvini threatened to bring down the government if the deficit target was changed.
- The Brexit plan faces a lot of dissent in the UK and there is no assurance it will pass a vote in Parliament.
- While online sales were strong on Black Friday, store traffic was down 5-9% year-over-year for Thanksgiving and Black Friday, according to a Wall Street Journal report citing data from RetailNext.
- The G20 meeting between President Trump and President Xi could just as easily end without any sense of trade detente between the two leaders.
Basically, then, one can take the headline catalysts with a grain of salt.
The only one that makes any real sense is the idea that the stock market is simply poised to bounce from a short-term oversold condition, with the beaten-down growth stocks presumably set to lead the rebound effort.
That leadership posture is understandable when taking into account that they have been the weakest links in a pullback that has seen the major indices decline between 9.6% and 13.8% since the start of October.
The retail stocks should be a hotbed of trading activity. 'Tis the season after all and 'tis Cyber Monday, which should be a good one.
It isn't hurting matters either that Mother Nature is giving the retailers a tailwind with some wintry weather across a good part of the country that is perfect for selling items like sweaters, gloves, boots, and other seasonal merchandise.
There isn't any notable economic data out of the U.S. today, yet there will be some reports of added interest as the week progresses. The Case-Shiller Home Price Index and Consumer Confidence reports will be out on Tuesday and will be followed by the second estimate for Q3 GDP and the New Home Sales report for October on Wednesday, and the Personal Income and Spending report for October on Thursday.
Separately, the FOMC Minutes for the November meeting will be released on Wednesday and will be studied carefully for any hints into the possible trajectory of the fed funds rate path in 2019.