By this point, it shouldn't be a mystery as to why the stock market has a bullish bias. It has ridden the wave of low interest rates, solid earnings, and tax reform optimism all year. This morning isn't really any different, never mind that the futures for the major indices aren't up big. The telltale fact of the matter is that there is still a notable absence of sellers.
Currently, the S&P futures are up two points, the Nasdaq 100 futures are down seven points, and the Dow Jones Industrial Average futures are up 53 points.
You know things have been good for a while when indications like that qualify as being disappointing. It's indicative of a market that has come to expect more each and every day, because it seems as if it gets more each and every day.
The Dow Jones Industrial Average hit a record high on Monday for the 70th time this year, leading other major indices into record territory, which included an intraday peak above 7,000 for the Nasdaq Composite.
Those moves were fueled by tax reform optimism, which got solidified on the news that Senators Lee and Collins plan to vote 'Yes' on the tax bill after being undecided previously. That news has the market pretty much convinced that passage of the tax bill is going to happen this week and that President Trump will deliver on his declaration of providing a tax cut for individuals and businesses before Christmas.
The vote in the House is expected to occur around 1:30 p.m. ET today. A vote in the Senate could come as early as tomorrow.
The finish line is in sight, then, which is why buyers may be running out of some gas right now as they have been sprinting down the home stretch.
Along the way, their adrenaline has been juiced further by M&A activity and encouraging economic data, which is part of this morning's landscape as well.
Today's deals feature the news that McDermott (MDR) is going to acquire CB&I (CBI) in a $6 billion stock deal and an affirmation from Humana (HUM) that it will spend $800 million to acquire a 40% minority stake in Kindred Healthcare (KND).
Separately, the Housing Starts and Building Permits report for November was stronger than expected.
Starts increased 3.3% to a seasonally adjusted annual rate of 1.297 million units (Briefing.com consensus 1.259 million) from a downwardly revised 1.256 million (from 1.290 million). Permits slipped only 1.4% to a seasonally adjusted annual rate of 1.298 million (Briefing.com consensus 1.280 million) from an upwardly revised 1.316 million (from 1.297 million).
The key takeaway from the report is that there was a 1.4% increase in permits for single-family homes and a 5.3% increase in single-family starts, as that is where supply growth is greatly needed to meet home buyer demand.
The Housing Starts report also featured some positive GDP growth implications. The number of privately-owned units under construction at the end of the period increased 1.0% to 1.110 million. That left the fourth quarter average at 1.105 million, which is 2.5% above the third quarter average and a positive input for GDP growth models.
The futures market took the encouraging economic news in stride, which is to say it didn't react much to it as its reactive instincts have been dulled a bit by all of the increased excitement of late.