Coming off the three-day weekend, the stock market looks poised to start things today on a groggy note.
The S&P futures are down eight points and are trading 0.2% below fair value. The Nasdaq 100 futures are down 20 points and are trading 0.2% below fair value. The Dow Jones Industrial Average futures are down 64 points and are trading 0.2% below fair value.
These early indications aren't much to speak of given the sizable gains that were achieved on Friday. The only read through is that there is an expectation for some profit-taking activity in the early going after Friday's rally -- and after the S&P 500 has soared 18.1% from its December 24 low.
There is probably an expectation, too, that the market will rebound from any initial profit-taking activity, because that is pretty much what it has done continually over the course of the last eight weeks.
There is nothing in the news mix that would seemingly stand in the way of a rebound try.
Walmart (WMT) topped quarterly earnings expectations on strong same-store sales and e-commerce sales growth, and reaffirmed its FY20 outlook. The stock of the Dow component is up 3.7%.
Trade talks between the U.S and China are continuing this week in Washington. It has been very clear in the price action that the stock market, in spite of reports that an agreement has not been struck on structural trade issues, is expecting a favorable resolution of some kind by March 1 that will ease its anxiety about the trade spat weighing on economic activity.
The market has grown accepting of the idea that it would be favorable if things simply weren't allowed to get any worse.
We suppose one could point a finger at some disappointing sentiment data out of the eurozone as a basis for this morning's early weakness, but one can point a finger right back at that contention knowing that the U.S. stock market has had no problem in 2019 rallying in the face of disappointing data out of the eurozone.
The offset for all weak data is the countervailing thought that it will translate into dovish-minded monetary policy.
On a related note, Bloomberg has reported that the ECB's chief economist, Peter Praet, floated the idea that the ECB could change its forward guidance on interest rates if the eurozone economy slowed more sharply than expected. The remark has hung like a wet blanket on an already soggy euro.
The Federal Reserve, meanwhile, is slated to release the minutes form its January FOMC meeting on Wednesday. They will receive ample attention given the Fed's shift to a more dovish-minded view and overt hints from Fed officials that the balance sheet normalization effort could end this year.
Something that doesn't seem likely to end soon is the legal challenge to President Trump declaring a national emergency in an effort to get a border wall built. California and 15 other states have filed a lawsuit, according to CNBC, aiming to negate the president's declaration.
This was completely expected, though, which is another way of saying that it isn't the reason the futures are negatively biased this morning.
The only reason that has any true merit is the relatively longstanding contention now that the market is due for a pullback after a big run -- whether one is basing that off Friday's sizable gains or the sizable gains since December 24.