Rising interest rates threw the stock market for a loop on Tuesday. That wasn't the case on Wednesday, however, as the stock market registered some modest gains that belied a solid move by the Russell 2000 to a new record high.
Today, the early tone is reserved as participants seem to be minding some speed bumps that include the higher interest rates, the continued uncertainty surrounding trade matters, and the continued rise in oil prices ($72.05, +$0.56, +0.8%), which are fueling inflation expectations and worries about a possible slowdown in consumer spending.
The S&P futures are down five points and are trading 0.2% below fair value. The Dow Jones Industrial Average futures are down 22 points and the Nasdaq 100 futures are down 31 points, pressured by a weak response to Cisco's (CSCO) latest earnings report.
Cisco topped consensus revenue and earnings estimates for its fiscal third quarter and issued in-line guidance for its fiscal fourth quarter. Reportedly, there was some disappointment that Cisco's growth and guidance wasn't stronger given the favorable IT spending environment. Shares of CSCO are down 4.0%.
Walmart (WMT), meanwhile, has gotten a favorable response following its better than expected fiscal first quarter report, which included a 2.1% increase in Walmart U.S. comparable sales that was slightly below expectations. Shares of WMT are up 1.8%.
In other corporate developments, Ford (F) said it is going to restart F-150 production ahead of schedule and reaffirmed its 2018 adjusted EPS guidance of $1.45 to $1.70, saying it expects an adverse impact of $0.12 to $0.14 per share in the second quarter due to lost production.
Shares of Ford have edged higher in pre-market trading. Neither Ford nor Walmart, though, are carrying the day.
Nothing -- not even another encouraging initial claims report -- seems to be carrying the stock market this morning, which has a groggy feel to it.
With respect to the initial claims report, it showed claims increased by 11,000 to 222,000 (Briefing.com consensus 216K) for the week ending May 12. Continuing claims for the week ending May 5 decreased by 87,000 to 1.707 million, which is the lowest level since December 1, 1973.
The key takeaway from the initial claims report is that it covers the period in which the survey for the May employment report was conducted. The continued low level of initial claims, then, should continue to feed expectations for another solid increase in nonfarm payrolls.
The Philadelphia Fed Index also brought some encouraging economic news as it pointed to a pickup in general manufacturing activity in the Philadelphia Fed region. That conclusion is drawn from the uptick in the index to 34.4 (Briefing.com consensus 20.0) from 23.2 in April.
The key takeaway from the report, however, is that the Prices Received Index -- a reflection of manufacturers' own prices -- increased seven points to 36.4, which is the highest reading since February 1989.
There hasn't been any untoward reaction in the Treasury market to the data, yet it will be tucked away as another item that promises to be part of the inflation expectations narrative.
The yield on the 10-yr note is at 3.10%, unchanged from yesterday's settlement, but up 174 basis points from the July 2016 low.