The major indices suffered a down day on Wednesday, which left everyone scrambling to figure out a reason why they did. The simple reason is that they were due for a pullback.
Rising interest rates, misgivings about tax reform, and uncertainty about the Fed Chair appointment could all be cast as catalysts for the retreat, yet all of those elements have been in the trading mix for many weeks as the major indices have rolled to one new record high after another.
It wasn't that they didn't matter on Wednesday, it's just that they became the most convenient excuses to explain a retreat in the market, which had seen the Dow Jones Industrial Average (!) climb 5.1% in a month's time.
There was a due date on Wednesday and sellers delivered -- plain and simple.
Today, the tone is mixed. The S&P futures are up two points, the Nasdaq 100 futures are down eight points, and the Dow Jones Industrial Average futures are up 52 points.
These readings should nonetheless translate to a higher start for the cash market on what has been the busiest day of earnings reporting yet for the third quarter.
Per usual, most of the earnings news has been better than expected, with companies like Ford (F), Comcast (CMCSA), Union Pacific (UNP), Las Vegas Sands (LVS), and even Twitter (TWTR) included in that mix.
There are too many reports to mention here, so be sure to visit Briefing.com's Earnings Calendar page for the full rundown of results.
The general takeaway, though, is that the earnings news itself isn't disrupting the stock market's bullish bias.
In the same vein, the ECB isn't really either. It left its ultra-low (and even negative) policy rates unchanged at today's Governing Council meeting. Also, as expected, the ECB decided to curtail its asset purchase program (APP).
The APP is conducted at a current monthly pace of €60 billion, but starting in January 2018, it will continue at a monthly pace of €30 billion until the end of September 2018, or beyond, if necessary. If conditions change to warrant a pickup in monthly asset purchases, the ECB said it stands ready to make that adjustment.
In brief, the ECB decision is garnering the label of being a "dovish tightening," which is to say the ECB is still largely favoring loose financial conditions in an effort to get inflation on a sustained path that is consistent with its aim of close to, but below, 2.0%; hence, it continues to vow that key ECB interest rates are expected to remain at their present levels for an extended period of time, and well past the horizon of net asset purchases.
The market's interpretation of ECB policy matters is reflected in the euro, which is down 0.6% against the dollar to 1.1751.
In other developments, market participants took the latest initial claims report in stride. It showed initial claims for the week ending October 21 rose by 10,000 to 233,000 (Briefing.com consensus 235,000) and that continuing claims for the week ending October 14 decreased by 3,000 to 1.893 million.
Claims taking procedures continued to be disrupted in Puerto Rico and the Virgin Islands, yet the underlying message in the initial claims data is that it is consistent with a tight labor market.
The four-week moving average for initial claims decreased by 9,000 to 239,500 while the four-week moving average for continuing claims decreased by 4,500 to 1,903,500 -- the lowest level since January 12, 1974.
As noted above, this morning was a busy period of earnings reporting, yet things will be even busier after the close and even more riveting with reports from Amazon.com (AMZN), Alphabet (GOOG), and Microsoft (MSFT) on tap. Also, the House is expected to vote today on the Senate's budget resolution, which will clear up some matters as it relates to path of tax reform efforts.
The latter considerations could keep a lid on the Nasdaq today, and perhaps the broader market, but for now, there are buyers in the mix.