The pre-Fourth of July trading turned out to be a dud for the stock market, which fizzled out amid a steady sell-off in afternoon trade that wiped out an early 0.4% gain and left the S&P 500 down 0.5%. There will be some fireworks, however, at the start of the post-Fourth of July session, as the S&P futures are up 19 points and trading 0.6% above fair value.
The Nasdaq 100 and Dow Jones Industrial Average futures are lighting up the sky, too. Currently, they are up 58 points and 161 points, respectively.
Quite the roller-coaster ride, eh? Such is the nature of a thinly-traded market and a market that has been subject to the whims of trade rhetoric.
Let it be said, then, that the futures market is trading on a whim this morning, bolstered by trade news that isn't exactly "new," but which has nonetheless injected some new hope that a full-fledged trade war will be averted.
Specifically, there are press reports pointing to the prospect of discussions between the U.S. and the EU possibly leading to the removal of tariffs on imported vehicles. Nothing has been agreed to at this point, yet the mere suggestion it's on the table has been a catalyst for this morning's upside bias.
The irony is that we are only a day away from the U.S. imposing tariffs on imported goods from China worth as much as $34 billion, and China doing the same in reverse if those tariffs go into effect.
China has said it won't be the one to fire the first shot, but to be clear, it will fire back to protect its interests.
The dichotomous perspective on trade issues has manifested itself in the performance of foreign markets. Major bourses in Europe are up between 0.6% and 1.4% while major indices in Asia declined between 0.2% and 0.9%. It was China's Shanghai Composite, by the way, that was down 0.9%.
Anyhow, the U.S. stock market is going to follow form with Europe at the open.
Corporate news of note has been limited, which isn't a surprise. One key headline, however, involves Micron Technology (MU).
Recall that Micron, and the semiconductor stocks, helped pace Tuesday's late-day slide following reports that a Chinese court temporarily banned the sale of Micron chips. Micron clarified this morning that the negative impact from the injunction on two subsidiaries will be approximately 1% and that it continues to expect its fiscal fourth quarter revenue to be between $8.0 billion and $8.4 billion.
Shares of MU are up 4.0% in pre-market trading. That bounce is lifting some trading spirits, as it is expected to carry over to other semiconductor issues and will likely help the S&P 500 information technology sector -- the market's largest sector -- assume a leadership position.
In economic news, the ADP Employment Change Report for June showed an estimated 177,000 positions were added to private-sector payrolls (Briefing.com consensus 180,000). That was pretty much in-line with our consensus estimate and won't alter expectations in front of the Employment Situation Report for June on Friday.
The initial jobless claims report won't either.
Initial claims for the week ending June 30 increased by 3,000 to 231,000 (Briefing.com consensus 225,000). Continuing claims for the week ending June 23 increased by 32,000 to 1.739 million.
The key takeaway from this report is that there are no alarm bells ringing in it. The initial claims and continuing jobless claims levels continue to be low and encouraging, which is why the market keeps hitting the snooze button upon its release.
The ISM Non-Manufacturing PMI for June (Briefing.com consensus 58.3; Prior 58.6) will be released at 10:00 a.m. ET and will be followed by the release of the FOMC Minutes for the June meeting at 2:00 p.m. ET.
For now, the open is poised to be a good one, full of fireworks that produce a green hue on stock monitors.