There was a bullish bias on Friday following some appeasing political developments in Europe and some encouraging employment data out of the U.S. That bias has carried over this morning.
The S&P futures are up nine points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 24 points and the Dow Jones Industrial Average futures are up 135 points.
It's difficult to get a bead on why the market is indicated higher like it is. We suspect it's a case of seeing just how far the bulls will be able to ride Friday's relief wave, considering that the headlines on trade developments over the weekend had a negative tone to them.
- The U.S-China trade talks in China, led by Commerce Secretary Ross, ended without any new agreements -- other than China agreeing to declare an end to prior trade agreements with the U.S. if the U.S. follows through with imposing tariffs on $50 billion of imported Chinese goods
- The U.S. decision to impose steel and aluminum tariffs on allied countries was derided by finance ministers at their G7 meeting in Canada; and
- NAFTA negotiations remain bogged down, with Canadian Prime Minister Trudeau saying that the U.S. proposal of a NAFTA sunset clause is a non-starter
Market participants are looking past these headlines for the time being, yet it's headlines like these that make it challenging to trust any rally effort.
We have seen for months now how quickly sentiment can shift from one day to the next because of a single headline.
For now, the market is maintaining an upbeat attitude, undaunted by weakness in Facebook (FB) following a critical New York Times article highlighting further concerns about the company's data sharing agreements, and weakness in Micron (MU) following a Wall Street Journal article suggesting Chinese regulators are investigating chip makers, including Micron, for an unknown reason.
Also, Nektar Therapeutics (NKTR) is down 30% after sharing what has been deemed disappointing preliminary cancer trial data involving its drug NKTR-214, which was being used in combination with Bristol-Myers's (BMY) cancer drug Opdivo, at the ASCO Conference in Chicago.
That conference is churning out a bunch of headlines that will make the pharmaceutical/biotech stocks among today's more actively-traded issues. Merck (MRK), for instance, is up 1.6% after sharing some positive trail results involving its cancer drug KEYTRUDA.
The gain in Merck, whose market cap is roughly 10x the size of Nektar Therapeutics', has acted as an offset. Similarly, Apple (AAPL) is up 0.8% ahead of the start of its Worldwide Developers Conference today and that is helping to offset the early weakness in shares of FB and MU.
There hasn't been any economic data of note. Today's lone release is the Factory Orders Report for April (Briefing.com consensus -0.5%; Prior +1.6%), which will be released at 10:00 a.m. ET.
That report won't move the market, which is marching to its own carryover beat right now.