The stock market cruised to a comfortable victory on Monday as investors launched yet another 'buy-the-dip' campaign on the heels of last week's slide. The upbeat sentiment continues to linger this morning and has been further strengthened by news that North Korea will not launch missiles towards the U.S. territory of Guam, which it threatened to do last week. The S&P 500 futures currently trade six points, or 0.2%, above fair value.
North Korean state media said on Tuesday that Supreme Leader Kim Jong-un has decided against launching missiles towards the island of Guam after examining a military plan presented to him by his senior officers. In addition, South Korean President Moon Jae-in said that the U.S. would need South Korea's consent in order to take military action on the Korean Peninsula, something he wants to prevent by all means.
Safe-haven assets are trading lower amid this morning's risk-on sentiment; gold is down 1.3% at $1,274.05/ozt, the Japanese yen has dropped 1.1% against the U.S. dollar to 110.81, and the benchmark 10-yr yield, which moves inversely to the price of the 10-yr U.S. Treasury note, is up six basis points at 2.28%.
Investors received a sizable batch of economic data earlier this morning, which was highlighted by better than expected retail sales for July:
- July retail sales increased 0.6%, which is above the Briefing.com consensus of +0.3%. The prior month's reading was revised to +0.3% from -0.2%. Excluding autos, retail sales increased 0.5% while the Briefing.com consensus expected an increase of 0.3%. The prior month's reading was revised to +0.1% from -0.2%.
- Import prices excluding oil declined 0.1% in July after rising 0.1% in June. Export prices excluding agriculture increased 0.3% in July after finishing flat in June.
- The Empire Manufacturing Survey for August rose to 25.2 from the prior month's reading of 9.8. The Briefing.com consensus estimate was pegged at 13.0.
Tuesday's last economic reports--June Business Inventories (Briefing.com consensus 0.4%) and the August NAHB Housing Market Index (Briefing.com consensus 65)--will be released at 10:00 ET.
In earnings news, a host of retailers reported their quarterly results this morning with the reactions being largely negative thus far. Advance Auto (AAP 92.83, -16.49) and Coach (COH 43.30, -4.62) have plunged 15.1% and 9.6%, respectively, following their latest reports. AAP missed earnings estimates while COH missed on revenues and issued below-consensus guidance.
Dow component Home Depot (HD 153.34, -0.91) is also down, dropping 0.6%, despite beating bottom-line estimates and raising its guidance. However, on a positive note, TJX (TJX 70.00, +0.38) is up 0.6% after beating earnings estimates.