The stock market on Tuesday looked a lot like it has looked for the past month. Just when it appeared as if the bears had a decisive edge, they lost it. The bulls, meanwhile, clung to their lifeline of mega-cap tech stock leadership, yet they still couldn't launch the broader market into a booster phase. The S&P 500 ended the session little changed.
Tuesday's market was abuzz with conversation regarding Donald Trump, Jr.'s release of his email correspondence arranging a meeting with a Russian attorney to discuss some possibly damaging information on then-presidential candidate Hillary Clinton. Following the email disclosure, allegations of collusion swirled in the air, but so, too, did admonitions of those allegations.
In other words, the market found a lot to talk about on a slow news day, but ultimately, it wasn't sure what to make of it all; hence, it went to neutral ground to await further information.
The press has understandably made the email disclosure a main talking point again this morning, yet futures traders at this time don't appear to be dwelling on the political drama. The S&P futures are up 11 points and are trading 0.5% above fair value while the Nasdaq 100 futures are up 44 points and are trading 0.9% above fair value.
That positive disposition is striking considering there is speculation that shipments of Apple's (AAPL) iPhone 8 might be delayed due to bugs that have yet to be fixed. Reports about troublesome bugs not being fixed in time seem to precede every major product release, though, so investors have handled the speculation in a calm manner. Shares of AAPL are actually up 0.4% in pre-market action.
Separately, market participants had an underlying sense that the table for Ms. Yellen's monetary policy report for the House Financial Services Committee at 10:00 a.m. ET was set with the release of the FOMC Minutes for the June meeting last week.
Her prepared remarks, which were released a short time ago, validated much of the market's thinking, although she left the door cracked open for a softer stance on rate hikes (or the lack thereof) with her observation that at present she sees roughly equal odds the U.S. economy's performance will be somewhat stronger or somewhat less strong than the Fed currently projects.
Market participants warmed to that view as the futures spiked to their highs of the morning after it was communicated while the Treasury market enjoyed a wave of buying interest. The 10-yr note yield is down six basis points to 2.31% and the 2-yr note yield is down six basis points to 1.33%.
Elsewhere, oil prices have jumped 1.7% to $45.82 per barrel on the back of the American Petroleum Institute's report that crude and gasoline stockpiles saw a much larger draw than expected in the latest week. The Department of Energy will release its weekly inventory report at 10:30 a.m. ET.
The Beige Book Report on economic conditions will be released at 2:00 p.m. ET, yet it should be overlooked in very short order considering the market will be hearing from the Fed Chair herself on economic conditions earlier in the day.
So, a stock market that held on neutral ground on Tuesday looks poised to seek higher ground at the start, energized by multiple factors: (1) the thought that the Fed may not be as aggressive as feared with its rate hikes (2) mega-cap tech stock leadership (3) lower long-term rates and (4) rising oil prices.
That's a four-on-the-floor transmission that is going to shift the cash market into drive when the opening bell rings.