The stock market had a good day on Tuesday. It could be another good day today when it's all said and done, yet it's clear it won't be a good open.
The S&P futures are down 22 points and are trading 0.9% below fair value. The Nasdaq 100 futures are down 53 points and the Dow Jones Industrial Average futures are down 216 points, which also leaves them roughly 0.9% below fair value.
That negative bias is a byproduct of geopolitical angst, which was dialed up this morning after Russia said it would shoot down any missiles fired at Syria and President Trump responded in a tweet, telling Russia to get ready because the missiles are coming.
A second tweet in which the president told Russia all nations need to work together and ended with the query "Stop the arms race?" took a little of the edge off, yet it has struck the market that a military response of some kind in Syria seems inevitable. That thinking is simply adding to the uncertainty that has fueled volatile trading activity this year.
So, there's a risk-off trade for the time being that is weighing on stocks and the dollar and boosting bond and gold prices.
The Consumer Price Index (CPI) for March hasn't altered the pre-market tone. It was mixed from a headline perspective.
Total CPI decreased 0.1% (Briefing.com consensus +0.1%), weighed down by a 2.8% decline in the energy index. Core CPI, which excludes food and energy, was up 0.2%, as expected, paced by increases in the indexes for shelter, medical care, personal care, auto insurance, and airline fares.
On a 12-month basis, total CPI is up 2.4%, versus 2.2% in February and the 1.6% average annual rate over the past 10 years. Core CPI, meanwhile, is up 2.1%, versus 1.8% in February. That is the highest year-over-year change in core CPI since February 2017.
The key takeaway from the report is that it showed a firming (though not scary) inflation trend that will keep the Federal Reserve wedded to its tightening bias and belief that at least two more rate hikes are warranted this year.
On a related note, the minutes from the March FOMC meeting will be released at 2:00 p.m. ET today. Recall that Fed Chair Powell spoke recently, saying he expects inflation to pick up this spring and that further gradual rate hikes are likely. That fresher perspective should temper any market-moving capability of the minutes.
Another key item that will be watched closely today is day two of Facebook (FB) CEO Mark Zuckerberg's testimony on Capitol Hill regarding the data breach scandal. That testimony before the House Commerce Committee is slated to begin at 10:00 ET.
Mr. Zuckerberg reportedly acquitted himself well in his testimony Tuesday before the Senate Commerce Committee. Shares of Facebook rose 4.5% on Tuesday and are currently indicated 0.5% lower.
Crude oil futures, on the other hand, are trading 0.8% higher at $66.03 per barrel. That gain has been propped up by a geopolitical premium tied to speculation that oil supplies could be disrupted in the event a military response in Syria foments a broader conflict in the Middle East.
Everyone can hope that doesn't happen, yet it's a consideration that has weighed on sentiment in the early going.