Wednesday was a huge day for Boeing (BA), but for the rest of the market, it was just a flat day. Despite a rash of better than expected earnings reports, the S&P 500 managed only a fractional gain. Today, the move at the start of trading will have a little more positive backing, but thanks to Facebook (FB), the Nasdaq Composite is where the bulk of the opening buying interest will be based.
Currently, the S&P futures are up five points and are trading 0.2% above fair value while the Nasdaq 100 futures are up 42 points and are trading 0.7% above fair value.
Facebook lived up to investors' high expectations when it posted its second quarter results, reporting revenue growth of 44.8% on double-digit increases in daily and monthly active users. In addition, Facebook narrowed its FY17 operating expense guidance to 40-45% from 40-50%, tempering concerns about potential operating margin pressures.
Shares of FB are trading 7.9% higher in pre-market action, supported by a number of analysts raising their price targets for the stock.
The favorable response to Facebook 's report is setting a good tone ahead of Amazon's (AMZN) report after the close today.
Overall, though, the second quarter earnings reporting period has a set a good tone for the broader market. The positive earnings surprises have been broad-based, and, most encouragingly, they have been fueled to a large extent by solid revenue growth.
The reporting between yesterday's close and today's open has been the busiest period yet, including results from the likes of Verizon (VZ), Procter & Gamble (PG), Southwest Air (LUV), Whirlpool (WHR), Dow Chemical (DOW), Comcast (CMCSA), UPS (UPS), and Mastercard (MA). We'd advise readers to visit our Earnings Results page to catch a glimpse of the full rundown of earnings reports.
According to FactSet, the second quarter blended earnings growth rate for the S&P 500 now stands at 9.0% versus 6.6% at the start of the reporting period.
The S&P 500 is up 2.3% month-to-date, driven by a 5.8% gain for the information technology sector that will be extended when trading begins.
The main impediments for the stock market right now arguably are festering valuation concerns and the sense that it has gotten overextended on a short-term basis. That might help explain why the broader market didn't get more out of a 10% gain in Boeing yesterday and the notion following the Fed's policy directive that a rate hike is unlikely at the September meeting.
It will be interesting to see, then, if there is a relatively quick move to sell into today's early strength or whether Facebook's strength can generate an enduring, and broad-based, advance into today's close.
This morning's economic data hasn't provided any strong directional clues since it was somewhat mixed..
Durable orders for June surged 6.5% (Briefing.com consensus +2.9%) on the back of a robust gain in transportation equipment orders (+19.0%) that was powered by a 131.2 % increase in nondefense aircraft orders. Excluding transportation, new orders for durable goods were up a more modest 0.2% (Briefing.com consensus +0.5%).
The key takeaway from the report is that orders for nondefense capital goods excluding aircraft -- a proxy for business investment -- were down 0.1%. Shipments of those same goods, though, were up 0.2% on the heels of a 0.4% increase in May, which will be a positive input for Q2 GDP forecasts.
Initial claims for the week ending July 22 ticked up by 10,000 to 244,000 (Briefing.com consensus 240,000) while continuing claims for the week ending July 15 decreased by 13,000 to 1.964 million.
It's more of the same on the initial claims front, which portends good news most likely for nonfarm payroll increases.
Separately, the advance report for international trade in goods showed a narrowing in the goods deficit to $63.9 billion in June from $66.3 billion in May, as exports of goods were $1.8 billion more than May exports and imports of goods were $0.7 billion less than May imports.
The futures market didn't react much to the data.