The S&P futures are up three points and are trading 0.1% above fair value. That's not a robust opening indication on the surface of things, yet it does in fact underscore the bullish bias of the stock market.
There is a bit of a "pain trade" in the futures indication in the sense that the market looks inclined to keep squeezing higher in the wake of the 1.8% decline it suffered last Wednesday. That loss has almost been recovered over the course of the last three trading sessions as the patented buy-the-dip trade has prevailed once again.
We highlight the "pain trade" this morning knowing that there are some seemingly notable reasons in the headlines for the stock market to go on the defensive.
- There was a terrorist bombing in England that has claimed the lives of more than 20 innocent civilians
- There is a Washington Post article discussing alleged efforts by President Trump to get intelligence officials to deny publicly any collusion between the Trump campaign and Russian officials involving the 2016 election; and
- Oil prices ($51.10, -$0.03, -0.04%) have softened after the administration's FY18 budget proposed selling $16.5 billion of oil from the Strategic Petroleum Reserve to help cut the deficit
Still, the futures market has retained a positive disposition, undaunted by negative matters both foreign and domestic.
The resolve in the face of the terrorist bombing, which ISIS claimed responsibility for, can be pinpointed once again to the belief that it will not have any material economic impact. Accordingly, it is viewed with disdain from the personal side of things, but it has ultimately been excused as a selling catalyst on the financial side of things.
The proof of point is seen best in the UK's FTSE 100, which is up 0.2% at the moment.
Some encouraging preliminary PMI reports for May out of the eurozone have provided some offsetting support this morning, as they continue to validate the notion of synchronized global growth. To that end, the composite PMI reading of 56.8 for the eurozone remains near a six-year high; meanwhile, Germany's Ifo Business Climate Index reading of 114.6 is reportedly the highest since 1991.
Markit will release some preliminary PMI data for the U.S. later this morning, yet the lone piece of "hard" data will be the April New Home Sales Report (Briefing.com consensus 605,000; prior 621,000), which is slated for release at 10:00 a.m. ET.
The latter report should provide a trading catalyst for the homebuilding stocks, which are already in focus following the better than expected earnings results reported this morning by Toll Brothers (TOL).
Shares of TOL are trading 2.7% higher in pre-market action. Autozone (AZO) shares, on the other hand, are down 8.7% after the auto parts retailer disappointed with its results.
The broader market for its part remains in the rebounded-minded zone, which is proving painful once again for short sellers.