EmailThis is a week where there won't be any shortage of trading catalysts. There is a load of earnings reports, a load of economic data, a load of central bank policy decisions, and undoubtedly a new load of political headlines that will have everyone talking.
One example of the latter is a tweet by President Trump in which he threatens to shut down the government if the changes to immigration laws and the border wall funding he is seeking do not come to fruition.
No one thing, though, seems to be carrying the load for the market at this time. If anything, the load is applying some wait-and-see pressure that is holding back the futures market despite Dow component Caterpillar (CAT) topping second quarter estimates and raising its full-year guidance.
Shares of CAT are up 3.6% in pre-market action. That is having a favorable influence on the Dow Jones Industrial Average futures, which are up 29 points. The S&P 500 futures and Nasdaq 100 futures, though, are basically flat.
The current tenor of the futures trade is suggesting a relatively flattish start for the major indices.
Friday's takedown of the information technology sector, and the lack of a spirited response to Amazon.com's (AMZN) blowout earnings report, have also created a little hesitation within the trading/investing republic.
The nagging sense that the FAANG stocks and the market's most important leadership group -- the information technology sector -- could be on course for a little R&R has curtailed some of the market's bullish enthusiasm.
The question is, will there be a rotation within the stock market to other sectors or will a potential loss of leadership from the information technology sector trigger a corrective move driven by broad selling interest?
This morning's futures indication certainly doesn't connote any urgency among investors to distance themselves from the stock market in a broad sense.
Therefore, it's possible the stock market might just be entering a consolidation phase after a big run that saw the S&P 500 gain as much as 5.0%, and the S&P 500 information technology sector gain as much as 7.9%, since July 3.
The market might also be gearing up for a more volatile phase. The Bank of Japan, the Federal Reserve, and the Bank of England will be making policy decisions this week. Heightened attention is on the Bank of Japan decision tonight, as there has been mounting speculation that the Bank of Japan might take steps to lessen its control of the yield curve.
Separately, the 10-yr U.S. Treasury note yield is flirting with 3.00% and there is a heavy load of economic data this week, highlighted by the July employment report on Friday.
Things are looking flattish at the moment. All things considered, that might not be such a bad thing if that's how things stand at the end of this loaded week.
