Last week ended with record finishes for the S&P 500 and Nasdaq Composite following the releases of the April employment report. Even so, there was a feeling that something was missing in that effort, which mitigated the feeling of enthusiasm for the historic achievement.
Two things missing in particular were volume and the financial sector. A third thing missing was a Treasury market sell-off.
In other words, it wasn't the most convincing break to new record closing highs. Perhaps that changes today, but at the moment, market participants are continuing to hold their applause.
The S&P futures are down three points and are trading roughly in-line with fair value, which points to the prospect of a relatively flat open for the stock market.
There is some ostensible reason to celebrate, though, with the news that pro-EU candidate Emmanuel Macron won the French presidential election. His victory over anti-EU candidate Marine Le Pen was widely expected and so was a wide margin of victory; however, things turned out even better than expected as he secured 66% of the votes, albeit on low voter turnout.
France's CAC 40 is down 0.9% and has pretty much set the tone for a sell-the-news response that has weighed on other European markets.
Some weaker than expected trade data out of China for April has also cast a pall on things. China's exports increased 8.0% year-over-year while its imports increased 11.9%. Still, those increases were below economists' average expectations and represented a noticeable deceleration from the March growth rates of 16.4% and 20.3%, respectively.
There isn't any economic data of note out of the U.S. today, yet the noteworthy PPI, CPI and Retail Sales reports for April will be released at the end of the week.
Separately, there is a smattering of M&A activity lending a measure of support.
Coach (COH) announced that it will acquire Kate Spade (KATE) for $2.4 billion, or $18.50 per share, in cash, which is a 27.5% premium to KATE's unaffected stock price seen in late December when takeover speculation surfaced in the media.
Sabra Healthcare REIT (SBRA), meanwhile, is going to acquire Care Capital Properties (CCP) in a $7.4 billion all-stock transaction, whereby CCP shareholders will receive 1.123 shares of SBRA stock for each share of CCP common stock they own. That translates to an approximately 12% premium based on Friday's closing prices.
Earnings results for the March quarter continue to roll in and they continue to roll in a very positive fashion. According to FactSet, the blended first quarter growth rate stands at 13.5% with 83% of S&P 500 companies having reported through Friday. That is the highest year-over-year earnings growth since the third quarter of 2011.
That growth, and the relatively reassuring guidance that has accompanied it, has kept the stock market in good stead amid all of the twists and turns of the (geo)political narrative.
The question being considered today is, how much of that good earnings growth has already been priced in to a market trading at 17.5x forward twelve-month earnings versus a 10-year average of 14.0x?
The stock market's fairly deliberate demeanor around new record highs seems to suggest plenty of participants are grappling with an answer.