Equity index futures are trading lower and trade concerns are once again being cited as the primary reason for the negative disposition. They are the same trade concerns that were in play last week when the S&P 500 and Nasdaq Composite both rose to record highs.
In other words, we are led to think the market had its cake last week and that it is choking on it this week.
Currently, the S&P futures are down nine points and are trading 0.3% below fair value. The Nasdaq 100 futures are down 29 points and the Dow Jones Industrial Average futures are down 103 points.
It's quite possible, though, that the market isn't choking on anything. It could simply be digesting a bountiful feast in August, which produced a 20% gain for Apple (AAPL), a 5.7% gain for the Nasdaq Composite, a 3.0% gain for the S&P 500, and a 2.2% gain for the Dow Jones Industrial Average.
The trade issues are not to be dismissed, however. They are a lingering source of uncertainty, which can rein the market in some after it has been let out to run.
Market participants are understandably struggling with the thought that the U.S. and Canada will get a NAFTA agreement worked out after Canadian Prime Minister Trudeau said Canada will not give in on its key demands; meanwhile, the specter of a new tranche of tariffs being implemented this week on $200 billion worth of Chinese goods continues to hang awkwardly over the market like a dangling preposition.
The Trade Balance Report for July isn't helping trade matters this morning either. It showed the trade deficit widening to $50.1 billion (Briefing.com consensus -$50.6 billion) from an upwardly revised $45.7 billion (from -$46.3 billion) in June. That was the largest monthly increase in the deficit reportedly since 2015.
The key takeaway from the report is twofold: (1) the widening deficit will create a drag on Q3 GDP growth and (2) the July report is going to fan the Trump Administration's flames about trade matters as it showed an increase in the deficit with both the European Union and China.
Trade talk, then, is going to be a central theme of today's market narrative along with the hearings on Capitol Hill involving Facebook (FB), Twitter (TWTR), and Alphabet (GOOG), and Brett Kavanaugh's nomination for Supreme Court justice.
Separately, watch for the airlines to get some added attention after United Continental (UAL) and JetBlue (JBLU) both provided upbeat third quarter guidance for passenger unit revenue growth expectations.
That guidance notwithstanding, the broader market is still grounded at the moment and isn't cleared for takeoff when the opening bell rings.