The market tone is much improved this morning. The S&P futures are up 22 points and are trading 0.6% above fair value; the Nasdaq 100 futures are up 75 points and are 0.9% above fair value; and the Dow Jones Industrial Average futures are up 219 points and are trading 0.7% above fair value.
The positive disposition is rooted in two primary factors: (1) an abiding sense that a buy-the-dip mentality will win out again and (2) favorable earnings results that are helping to feed an abiding sense that a buy-the-dip mentality will win out again.
Dow components Johnson & Johnson (JNJ), Goldman Sachs (GS), and UnitedHealth Group (UNH) all topped consensus earnings estimates for the third quarter, as did Morgan Stanley (MS), W.W. Grainger (GWW), BlackRock (BLK), Domino's Pizza (DPZ), and J.B. Hunt Transport Services (JBHT).
Those positive earnings surprises haven't all been greeted in the same positive light. For instance, BlackRock is down 3.0% on the disclosure that it suffered net outflows during the quarter, Domino's Pizza is down 3.7% reportedly on the recognition that its revenue and domestic same-store sales were a little light of expectations, and W.W. Grainger is down 7.9% after its revenue also came up just shy of expectations.
Shares of Johnson & Johnson are flat, but shares of Goldman Sachs, Morgan Stanley, and UnitedHealth are up between 1.5% and 2.6%.
The moves by investment banks Morgan Stanley and Goldman Sachs are perhaps the most notable since they are expected to help lift an ailing financial sector, which has effectively shrugged off recent reports from JPMorgan Chase (JPM), Citigroup (C), and Bank of America (BAC) to name a few.
In any event, the financial sector should be an influential source of support for the broader market in the early going along with the ailing information technology sector, which is due to get a boost from Adobe's (ADBE) reassuring fourth quarter guidance and outlook for FY19 revenues to be up 20%, as well as the belief the sector is due for a return to form after plunging 7.5% this month.
The "return to form" expectation also has some roots in an assumption that corporate share buyback activity will pick up in earnest again on the other side of the earnings reports, particularly with the sharp drop that has been seen in many stock prices.
Nothing can be taken for granted, yet it's fair to say many participants are considering it a safe assumption based on past experience.
At the same time, though, the market has its sight set on the future and it has been grappling with concerns about the pace of future economic and earnings growth.
Those concerns aren't going to vanish overnight, yet encouraging earnings guidance can go a long way toward dulling the stock market's bearish senses for the time being and instilling some upside momentum again in growth stocks, which played a major role in carrying the major indices to record highs.
There hasn't been any economic data of note out of the U.S. to this point, yet the economic calendar will come into play shortly with the release of the Industrial Production report for September (Briefing.com consensus +0.3%; prior +0.4%) at 9:15 a.m. ET. That report will be followed at 10:00 a.m. ET by the NAHB Housing Market Index for October (Briefing.com consensus 67; prior 67) and he JOLTS - Job Openings report for August (Prior 6.939 mln). The monthly TIC Flow report will be released at 4:00 p.m. ET.