0.00%. That's where everything sits today for the major indices in terms of how they have fared in November. In other words, a new day and a new month is dawning that most participants are hopeful will be a reversal of the October performance, which was the worst month for the S&P 500 since 2011.
For the official record, the S&P 500 declined 6.9%, yet it had been down as much as 10.7% as of October 29. Clearly, the month ended on an upbeat note with stocks finally living up to the expectation that they were due for a bounce from oversold conditions.
With the turn to November, the pressing question is, can that bounce last?
There is quite a bit to get through this month, beginning with Apple's (AAPL) earnings report after the close today and the Employment Situation Report tomorrow. The midterm election on November 6, however, looms as the biggest event of all, followed closely by the G20 Leaders' Summit on November 30-December 1, which will reportedly feature a sidebar meeting between President Trump and President Xi.
It's a long November road ahead, yet the short course this morning is paved with a modestly positive bias.
The S&P futures are up five points and are trading 0.2% above fair value. The Nasdaq 100 futures are up one point and are trading fractionally above fair value. The Dow Jones Industrial Average futures are up 69 points and are trading 0.2% above fair value.
That's not a bull rush by any means, yet it is a hoof in the right direction. Various factors are helping to push things along:
- The belief that the rebound effort will persist, with corporate buyback activity and bargain-hunting interest in beaten-down growth stocks continuing.
- An appreciation for seasonality. November marks what has historically been the best six-month return period for the stock market.
- An expectation that the first day of a new month will invite new inflows.
- The support of generally good earnings and economic news.
There has been a load of earnings reports since yesterday's close. Dow component DowDuPont (DWDP) helped set an encouraging bar, topping third quarter estimates, reaffirming its FY18 EPS outlook, and announcing a new $3 billion buyback program.
The only report that has the market's undivided attention at this point, though, is the one from Apple after the close.
Apple held up better than most stocks in October, slipping just 3.1%. Were the company to disappoint, it would have some catching up to do that could weigh heavily on the broader market and investor sentiment.
The weight of that expectation is probably holding back some buying interest today, along with the recognition that yesterday finished on a weak note.
In terms of the good earnings news, the unemployment claims report held true to form.
Initial claims for the week ending October 27 decreased by 2,000 to 214,000 (Briefing.com consensus 213,000) while continuing claims for the week ending October 20 fell by 7,000 to 1.631 million -- the lowest level since July 28, 1973.
Separately, third quarter productivity increased 2.2% (Briefing.com consensus 2.1%) on the heels of an upwardly revised 3.0% (from 2.9%) in the second quarter. Unit labor costs rose 1.2% (Briefing.com consensus 1.1%) following a downwardly revised 1.1% decline (from -1.0%) in the second quarter.
The key takeaway from the report is that productivity is picking up. The third quarter increase was double the prior 10-quarter average increase of 1.1%. Faster productivity is a springboard for a better standard of living.
The ISM Manufacturing Index for October (Briefing.com consensus 59.0; Prior 59.8) and the Construction Spending Report for September (Briefing.com consensus +0.2%; Prior +0.1%) will be released at 10:00 ET.