It is the last day of April, and barring a big setback, this month should be a winning one for the S&P 500. Entering today's trade, the S&P 500 is up 1.1% month-to-date and it will add some cushion to that gain when the opening bell rings.
Currently, the S&P futures are up five points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 18 points and the Dow Jones Industrial Average futures are up 117 points.
The thrust of the positive bias has been propelled by a spate of M&A activity and a reassuring earnings report from Dow component McDonald's (MCD).
Briefly, McDonald's bested the consensus earnings estimate by $0.12 and registered an impressive 5.5% increase in global comparable sales. Shares of MCD are up 4.0% in pre-market action, which is sure to help the price-weighted Dow Jones Industrial Average.
In terms of the M&A activity, there are four deals of note across different sectors, so they are literally having a broad market impact:
- T-Mobile (TMUS) and Sprint (S) reached an agreement, as had been rumored, to merge in an all-stock transaction
- Marathon Petroleum (MPC) is acquiring Andeavor (ANDV) in a $23.3 billion deal that provides a 24.4% premium for ANDV shareholders over Friday's closing price
- Prologis (PLD) is buying DCT Industrial Trust (DCT) in an $8.4 billion stock-for-stock transaction; and
- Marriott Vacations Worldwide (VAC) is acquiring ILG (ILG) for approximately $4.7 billion in cash and stock
Separately, Walmart (WMT) announced that it will be selling its UK subsidiary Asda Group to Sainsbury's in a deal that values Asda at approximately $10 billion. Walmart is going to retain a 42% stake in the merged business and it expects to recognize a non-cash loss of approximately $2 billion on the sale.
There won't be any shortage of corporate news throughout the week, which is going to be littered with more earnings results.
The question is, will the market wake up to the good earnings news or continue to hit the snooze button, as it has done since JPMorgan Chase reported its results on April 13? In the interim, the S&P 500 has increased just six points despite results that have amounted to the best quarter of earnings growth (23.2%) since the third quarter of 2010.
Beyond the earnings news, market participants will have their eye on the FOMC decision on Wednesday, the determination by the Trump Administration of whether to extend temporary steel and aluminum tariff exemptions for a number of key trading partners, and a busy economic calendar.
The latter features the April Employment Situation Report on Friday and today's Personal Income and Spending Report for March.
There weren't many surprises in the income and spending data, which were incorporated in Friday's Advance Q1 GDP report.
Personal income increased 0.3% (Briefing.com consensus +0.4%) after a downwardly revised 0.3% increase (from +0.4%) in February while personal spending jumped 0.4% (Briefing.com consensus +0.4%) following a downwardly revised 0.0% (from +0.2%) in February.
The PCE Price Index was unchanged, as expected. The core PCE Price Index, which excludes food and energy, was up 0.2%, as expected. Those monthly changes left the PCE Price Index up 2.0% year-over-year, versus 1.7% in February, and the core PCE Price Index up 1.9% year-over-year, versus 1.6% in February.
The key takeaway from the report is that it shows consumer inflation in the reaches of the Federal Reserve's inflation target, which will give the Federal Reserve some data-based ammunition to keep raising the fed funds rate (but not at Wednesday's meeting).
The Treasury market seemed to take this report in stride and is little changed across the curve, which was the case before the report was released. The Chicago PMI Report for April (Briefing.com consensus 58.0; Prior 57.4) and the Pending Home Sales Report for March (Briefing.com consensus +1.5%; Prior +3.1%) will be released at 9:45 a.m. ET and 10:00 a.m. ET, respectively.