The stock market is walking a familiar path this morning in that it appears to be lacking conviction despite another upside earnings surprise from a money-center bank.
Enter Bank of America (BAC), which topped analysts' average second quarter earnings per share estimate by six cents. Shares of BAC, which are down 3.3% year-to-date, are up 1.2% in thin pre-market trading. BlackRock (BLK), meanwhile, is down 1.0% after topping analysts' average estimate by $0.11.
BlackRock noted that investment inflows have been slowing due to investor uncertainty. That isn't necessarily a surprise, yet it's an admission that has tempered investors' enthusiasm for the upside earnings surprise.
The mixed response to these reports is in keeping with the otherwise mixed (and flattish) disposition of the futures market.
The S&P futures are down one point and are trading in-line with fair value. The Nasdaq 100 futures are up three points and the Dow Jones Industrial Average futures are up 12 points.
We'll chalk up the current leaning to macro indigestion, as a number of news items have transfixed market participants:
- President Trump and Russian President Putin are meeting today in Helsinki where they are reportedly discussing a range of topics in both a one-on-one and group setting. They will be holding a joint press conference at 9:50 a.m. ET.
- Leading EU and Chinese officials are having an annual meeting in Beijing, with trade matters at the top of their agenda
- Oil prices ($69.44, -$1.57, -2.2%) are weakening amid reports the Trump Administration might tap the Strategic Petroleum Reserve in an effort to hold down prices
- Uncertainty over the UK's Brexit plan has escalated as calls are being heard to hold a second Brexit referendum
- China released a host of data over the weekend, most of which didn't show any acceleration in growth. Q2 GDP was up 6.7% year-over-year, versus 6.8%, in the first quarter. Industrial production in June was up 6.0%, versus up 6.8% in May; fixed asset investment in June was up 6.0%, versus up 6.1% in May; and retail sales rose 9.0% in June, versus 8.5% in May; and
- Market participants are cognizant that Fed Chairman Powell is slated to provide his semi-annual monetary policy report to Congress on Tuesday and Wednesday
Beyond those broad strokes, there is some added interest in reports Goldman Sachs (GS) could name a new CEO this week and that Deutsche Bank (DB) sees its second quarter revenue and net income comfortably ahead of consensus estimates.
Still, the market hasn't been moved by anything, including this morning's Retail Sales Report for June, in a meaningful way.
A ratings action at UBS captures the indecisive tone in the broader market. To wit, UBS upgraded UPS (UPS) to Buy from Neutral and downgraded FedEx (FDX) to Neutral from Buy.
The Retail Sales Report, meanwhile, was better than expected after accounting for large upward revisions to the retail sales data for May.
In June, total retail sales increased 0.5% (Briefing.com consensus +0.5%) following an upwardly revised 1.3% increase (from 0.8%) in May. Excluding autos, retail sales jumped 0.4% (Briefing.com consensus +0.3%) after rising an upwardly revised 1.4% (from 0.9%) in May.
The key takeaway from the report is that it substantiates the widely-held views that an increase in consumer spending is going to factor prominently in driving a strong acceleration in Q2 GDP growth.
Separately, the Empire Manufacturing Survey for July dipped to 22.6 (Briefing.com consensus 21.0) from 25.0 in June, pressured by a downturn in all current indicators, including prices paid. The July reading remains comfortably above 0.0, which is the demarcation line between expansion and contraction.
The S&P futures, though, have stuck close to 0.0 in the wake of the data, the news, and the ruminations about whether the macro indigestion will pass.