The stock market had a little hiccup yesterday as the major indices all finished modestly lower, pressured by the underperformance of the information technology sector. It was a move that was probably overdue anyway considering at least in part that the Dow Jones Industrial Average had been riding a nine-session winning streak.
Things are looking a little weaker this morning, too. The S&P futures are down six points, the Nasdaq 100 futures are down 20 points, and the Dow Jones Industrial Average futures are down 39 points.
That negative bias is being attributed to reports that North Korea has threatened to test a hydrogen bomb in the Pacific Ocean.
In other words, North Korea has provided market participants with a further excuse to take some money off the table heading into the end of what has been a very good quarter so far, with the three major averages registering gains between 3.2% and 4.7%.
Don't get us wrong. North Korea's latest threat is not a good thing, but put in proper context, a six-point drop in the S&P futures and a two basis-point drop in the 10-yr note yield to 2.26% doesn't exactly connote a great deal of heightened anxiety about the situation.
If the market is concerned about anything at the moment, it is the recent underperformance of the widely-loved information technology sector.
Apple (AAPL), which has fallen 6.5% since the end of August, is applying some heavy pressure there, but in general, the sector is perhaps running into a wall of resistance that has been built on observations that it is overowned (a crowded trade in trader speak).
That perspective naturally invites some profit-taking activity after a big run.
The broader market, however, has held up reasonably well in the face of the information technology sector's relative weakness as it has been supported by the relative strength of the financial and energy sectors, which have been beneficiaries of sector rotation.
The question on the mind of traders today is whether follow-through weakness in the information technology sector will trigger broader selling efforts or continue to be offset by sector rotation.
Separately, there are some key happenings on the near horizon -- a Brexit speech from Prime Minster May and an OPEC compliance meeting today, as well as the German election on Sunday -- that are prompting a bit of a wait-and-see mentality.
There aren't any economic releases of note from the U.S. today, although preliminary manufacturing and services PMI readings out of the eurozone for September were encouraging.
There are some corporate developments of note. T-Mobile (TMUS) and Sprint (S) are reportedly close to striking a merger deal; Texas Instruments (TXN) and McDonald's (MCD) have announced dividend increases; CarMax (KMX) reported better than expected earnings; and regulators are reportedly discussing removing the systemically important financial institution designation for AIG (AIG).
Those items, and others, are generating some added attention, yet they just aren't generating any broad conviction to move the market higher at the start of trading.