Looking out our office windows in Chicago, we see grey skies and wet streets, which have generated a palpable feeling of blah this Friday morning in the Windy City. The opening forecast for the stock market feels pretty much the same.
Coming off a performance yesterday in which the S&P 500 declined 1.11 points, or 0.05%, the S&P futures are up two points this morning and are trading 0.08% above fair value. In other words, neither buyers nor sellers are showing much conviction as they are seemingly looking at the market right now with a sense of blah that matches the headline flow.
Per usual, there is ample news. The catch is that none of it is really captivating as a market mover.
- All 34 banks required to perform Dodd-Frank stress test passed the test, demonstrating they would have enough capital to continue lending under a severely adverse scenario. This was no surprise to industry watchers.
- Preliminary PMI readings for June out of the eurozone were mixed, with manufacturing readings generally better than expected and services readings generally weaker than expected
- In the wake of the Senate GOP's release of a health care reform bill on Thursday, press reports are covering the criticism of it within the GOP and outside the GOP. This is no surprise.
- Deutsche Bank downgraded Caterpillar (CAT) to Hold from Buy. In turn, the same firm also upgraded U.S. Steel (X) and AK Steel (AKS) to Buy from Hold.
- Bed Bath & Beyond (BBBY) had a disappointing earnings report that left it standing out as another presumed casualty of the Amazon (AMZN) effect
- Oil prices ($42.89, +$0.15, +0.4%) are continuing a tepid rebound effort, yet nothing has really changed in the way of concerns about excess production
There are several Fed speakers today -- St. Louis Fed President Bullard (11:15 ET), Cleveland Fed President Mester (12:40 ET), and Fed Governor Powell (14:15 ET). The only FOMC voter in that triumvirate is Fed Governor Powell who will be addressing the wonkish topic of "Central Clearing and Liquidity." Translation for most: blah.
Market participants will have their attention diverted to the economic calendar at 10:00 a.m. ET, which is when the New Home Sales Report for May (Briefing.com consensus 599,000; prior 569,000) will be released. Curious minds will be waiting to see if new home sales were stronger than expected in May like existing home sales were.
The aforementioned report could cause a stir for the homebuilding stocks and related ETFs like the iShares U.S. Home Construction ETF (ITB).
The irony this morning is that there isn't much conviction ahead of the open, yet this will likely end up as a day with very heavy trading volume. That's because of the annual reconstitution of the Russell Indexes, which takes effect after the close.
What happens leading up to the close will be made up along the way, though, considering the futures market before the open is showing shades of grey.