The S&P futures were down 23 points overnight and trading 0.9% below fair value. Currently, they are down two points and trading 0.1% below fair value.
Early reports attributed the stark weakness to concerns about a potential standoff between the U.S. and Saudi Arabia over the disappearance and alleged murder of Washington Post columnist Jamal Khashoggi.
The assumption was that a standoff could invite sanctions for Saudi Arabia and much higher oil prices for the rest of the world based on the added assumption that Saudi Arabia would respond by cutting oil supplies.
Those were the assumptions, yet they didn't register as prominently overnight in the oil market as one might have expected. WTI crude futures jumped as much as 1.9% to $72.70 per barrel, yet that price increase didn't match the reported seriousness of the issue. Accordingly, some of the headline angst was dialed down as it was subsequently thought that the oil market wasn't reflecting any undue concern about the matter at this juncture.
Oil prices are now up $0.52 to $71.86 per barrel.
A better-than-expected third quarter earnings report from Bank of America (BAC) was well-timed too, as that helped contribute to recovery efforts in the futures market.
Simultaneously, with the market rebounding on Friday, and the futures making a nice comeback from overnight lows, some of the comeback could have been driven by the thought that the rebound effort has more room to run, which in turn added to the momentum of this morning's rebound try.
It's all a guessing game as to why the futures market turned the way that it did. Right now it is pointing to a modestly lower open for the major indices.
This morning's economic data wasn't a change agent from a sentiment standpoint either. The Empire State Manufacturing Survey for October was stronger than expected, yet the Retail Sales report for September was curiously weak.
Retail sales were up just 0.1% (Briefing.com consensus +0.6%) for the second straight month while sales, excluding autos, fell 0.1% (Briefing.com consensus +0.4%).
The key takeaway from the report is that core retail sales, which factor into GDP growth models, were up a solid 0.5%. Hence, the headline numbers were disappointing, yet this report will still factor favorably for Q3 real GDP growth prospects.
The weak spots for retail sales in September were food services and drinking places (-1.8%), gasoline stations (-0.8%), department stores (-0.8%), health and personal care stores (-0.3%), and grocery stores (-0.1%). Conversely, there was strength in nonstore retailers (+1.1%), furniture and home furnishing stores (+1.1%), electronics and appliance stores (+0.9%), and motor vehicle and parts dealers (+0.8%).
Separately, the Empire State Manufacturing Survey checked in with a reading of 21.1 (Briefing.com consensus 18.0), up from 19.0 in September, led by notable increases in new orders and shipments. The dividing line between expansion and contraction is 0.0.
The Business Inventories report for August (Briefing.com consensus +0.5%; prior +0.6%) will be released at 10:00 a.m. ET.
Turning back to the corporate sector, Harris Corp. (HRS) and L3 Technologies (LLL) announced an all-stock merger of equals that will make the combined company the sixth largest defense contractor in the U.S. News of the merger should be an underpinning factor for other defense stocks.
Sears Holdings (SHLD), meanwhile, filed for Chapter 11 bankruptcy protection, as had been widely speculated. That news shouldn't cause too many shockwaves in the retail stocks today, yet it is one more reminder how the times have changed in the retail universe for big-box department stores.