It's not a complete case of deja vu this morning, but it's close. Equity futures are trading higher, spurred on by a rash of better than expected earnings results; oil prices are trading higher, spurred on by a bullish inventory report; Washington remains a soap opera, spurred on by a skittish health care reform debate; and the Fed is expected to leave its target range for the fed funds rate unchanged, spurred on by low inflation readings.
The few notable differences this morning include a bond market that is trading higher and the absence of any notable laggards in the technology sector.
Boeing (BA) has supplanted Caterpillar (CAT) as the blue chip earnings leader du jour.
Shares of BA are trading 3.5% higher after the aerospace giant blew past second quarter earnings estimates and raised its full-year guidance. Boeing has a high-priced stock in an absolute sense, which means its early gain is doing wonders for the futures of the price-weighted Dow Jones Industrial Average, which are up 73 points.
The Dow looks poised to lead the major indices when the opening bell rings as both the S&P 500 futures and the Nasdaq 100 futures are up less in percentage terms.
At the moment, the S&P futures are up four points and are trading 0.2% above fair value while the Nasdaq 100 futures are up 14 points and are also trading 0.3% above fair value.
Encouraging earnings results and/or guidance from the likes of Texas Instruments (TXN), Coca-Cola (KO), AT&T (T), U.S. Steel (X), Northrop-Grumman (NOC), Baxter (BAX), and Hershey (HSY) are feeding the blue-chip fire. Notably, Ford (F) topped estimates and raised its full-year guidance, yet its stock is down 1.7% in pre-market action as the help of a lower tax rate and a lack of revenue growth are focal points that have offset the earnings news.
By and large, earnings disappointments are few and far between. That point rings clear on Briefing.com's color-coded Earnings Results page, which has a lot more green (positive surprise) than red (negative surprise) on it.
With all of the good earnings, one might be wondering why the gains in the futures market aren't more pronounced.
Some of it has to do with the fact that the good earnings news was expected; some of it has to do with burgeoning concerns about the market being overbought on a short-term basis; some of it has to do with outright valuation concerns; some of it has to do with some nervous anticipation in front of Facebook's (FB) earnings report after the close; and some of it has to do with the Fed.
The newest policy directive from the Federal Open Market Committee (FOMC) will be released at 2:00 p.m. ET today. A rate hike is not expected, although market participants are waiting to see if the directive hints at the prospect of starting the process of normalizing the Fed's balance sheet soon (i.e. September).
The Fed doesn't like to surprise the market; nonetheless, with this bull market wrapped up in the gift of a market-friendly Fed, traders always respect the element of surprise on a Fed day, faint though it might be.
There won't be a press conference following the FOMC decision, which is one reason why most market participants don't expect to hear anything too shocking in today's directive.
Lat night's inventory report from the American Petroleum Institute, however, was shocking. It showed a draw of 10.23 million barrels in oil inventories, which has kept the fires burning on the oil price recovery effort. Including today's gain, crude futures ($48.38, +$0.51, +1.1%) are up 14% from their closing level on June 21.
The Department of Energy will release its weekly inventory report at 10:30 a.m. ET, but before then, the market will take stock of the New Home Sales Report for June (Briefing.com consensus 610,000; prior 610,000) at 10:00 a.m. ET.