It's April Fools' Day, yet it's no joke that the stock market is set to open the second quarter on a sharply higher note.
The S&P futures are up 20 points and are trading 0.7% above fair value. The Nasdaq 100 futures are up 66 points and are trading 0.8% above fair value. The Dow Jones Industrial Average futures are up 203 points and are trading 0.8% above fair value.
The positive bias is a byproduct of both carryover momentum from Friday (and the first quarter) and some manufacturing data out of China over the weekend that helped temper slowdown concerns and even gave the market some reason to be hopeful that a pickup in global economic activity could be unfolding.
The official China manufacturing PMI report for March increased to 50.5 from 49.2 while the Caixin Manufacturing PMI, which canvasses private manufacturers, rose to 50.8 from 49.9. A number above 50.0 is indicative of expansion.
For the record, Germany's final manufacturing PMI for March dipped to 44.1 from the preliminary reading of 44.7 and the final February reading of 47.6.
China's manufacturing rebound is the bigger item for the market, because it fits more neatly with the narrative that has been underpinning the stock market at the start of 2019.
Specifically, bulls have been willing to look past downward earnings revisions for the first quarter on the premise that earnings growth will pick up again in the latter half of the year along with economic activity. In the meantime, they are traversing a bridge of monetary policy support to that brighter future.
The February Retail Sales report out of the U.S. wasn't too bright, however.
Retail sales declined 0.2% (Briefing.com consensus +0.2%) on the heels of an upwardly revised 0.7% increase (from +0.2%) in January. Excluding autos, retail sales declined 0.4% (Briefing.com consensus +0.3%) after increasing an upwardly revised 1.4% (from +0.9%) in January.
The key takeaway from the report is that it reflects a slowdown in retail spending activity in February, which was likely adversely affected by the polar vortex.
Core retail sales, which exclude autos, gasoline station, building material, and food services and drinking places sales, declined 0.2%. That will be a negative input for first quarter GDP forecasts as this component factors into calculations for the goods component for personal consumption expenditures.
This is a big data day. The ISM Manufacturing Index for March, the Construction Spending report for February, and the Business Inventories report for January will all be released at 10:00 a.m. ET.
The economic news is overshadowing any corporate news for now, including Facebook (FB) CEO Mark Zuckerberg calling for more regulation.