The stock market is headed for higher ground when the opening bell rings and it's not because there was any resolution to Italy's political crisis. Rather, there is a budding belief that the reaction on Tuesday to Italy's political crisis was overblown.
An auction of 5-year and 10-yr Italian debt today that was met with strong demand has helped calm things down a bit. We wouldn't put it past this market either to feel consoled by the possibility that the rising tide of political uncertainty around the globe will convince the Federal Reserve to temper its own rate-hike expectations.
The latter could be wishful thinking at this point considering the Powell-led Fed hasn't presented itself as a malleable entity in the face of some bad-sounding headlines.
Time will tell what the Fed ultimately does, yet we're just trying to get into the market's head to explain for readers why there is a positive bias in the futures market this morning. An RBC Capital Markets upgrade of Exxon Mobil (XOM), better than expected results from Salesforce.com (CRM) and Dick's Sporting Goods (DKS), and some bargain hunting in the bloodied financial sector have also aided the early bias.
Specifically, the S&P futures are up 10 points and are trading 0.5% above fair value. The Dow Jones Industrial Average futures are up 125 points and the Nasdaq 100 futures are up 16 points.
We have also seen a reversal in the Treasury market, which absolutely buried short sellers on Tuesday. Currently, the 10-yr note is down 20 ticks and its yield has risen eight basis points to 2.85%.
Like the stock market, the Treasury market appears to be reacting to what many think was an overreaction on Tuesday.
There was nothing in this morning's data to drive sentiment in a big way since the headlines had a middling quality to them.
The second estimate for Q1 GDP contained a slight downward revision to 2.2% (Briefing.com consensus 2.3%) from 2.3%. The GDP Price Deflator was also revised down a tad to 1.9% (Briefing.com consensus 2.0%) from 2.0%.
Personal consumption expenditures growth was revised to 1.0% from 1.1%. Real final sales of domestic product, which excludes the change in inventories, was revised slightly higher to 2.0% from 1.9%.
Separately, the ADP Employment Change Report showed an estimated 178,000 positions were added to private sector payrolls in May (Briefing.com consensus 183,000). That was close to expectations, so naturally it wouldn't elicit much of a reaction.
The Advance International Trade in Goods Report for April revealed a narrowing in the goods deficit to $68.2 billion (Briefing.com consensus -$70.7 billion) from a downwardly revised $68.6 billion (from -$68.0 billion) in March.