It has been a good week so far -- a very good week - -for the stock market. Entering today's trading, the S&P 500 is up 2.2%.
The market's gains have been powered by cyclical sectors, which typically lead when market participants are feeling better about the economic outlook. Notably, this week's biggest laggards are non-cyclical sectors: utilities (-2.5%), telecom services (-1.2%), and consumer staples (-0.3%).
The general gist of things, though, is that there has been an embrace of a risk-on mindset, with technical factors and an abeyance of inflation/rate-hike concerns fueling the buying interest.
Since last Thursday's low, the S&P 500 has risen 5.0%. That's a huge move in a short period, so don't be surprised if any weakness today is attributed to a pullback from a short-term overbought condition.
At the moment, the S&P futures are up three points, leaving them slightly above fair value. The Nasdaq 100 futures are down eight points and the Dow Jones Industrial Average futures are up 33 points.
There isn't a great deal of conviction in the early going, which is probably due to an awareness that the stock market is, ahem, short-term overbought and could be subject to profit-taking activity.
The operative word is could. When the market gets rolling like it has been, a fear of missing out on further gains can be a great neutralizer of selling interest and a catalyst to further gains if selling efforts that many participants think will be coming don't gain any traction.
There isn't much in the way of corporate news driving matters at this juncture.
NVIDIA (NVDA), which reported better than expected results after yesterday's close and issued upbeat revenue guidance, is down 2.1% in a sell-the-news response. Shares of NVDA had risen 20% between April 25 and yesterday's close.
Similarly, Kohl's (KSS) is down 2.1%, getting knocked back on a Credit Suisse downgrade to Neutral from Outperform.
There are plenty of company-specific items in the headline mix, yet the fixation of the market right now is looking more macro oriented.
To that end, Speaker Ryan has set May 17 as a deadline for when any new NAFTA deal needs to be struck in order to consider the matter in the House this year; ECB President Draghi is slated to give a speech at 9:15 a.m. ET at a "State of the Union" conference in Italy; and President Trump is going to be presenting a plan at 2:00 p.m. ET to lower the cost of drugs.
There is also the macro matter of a flattening yield curve. The spread between the 10-yr note yield and the 2-yr note yield is down to just 41 basis points in a bull flattener move that has been helped along this week by some pacifying inflation reports.
The Import and Export Price Index Report for April, which was released this morning, got added to that mix.
Import prices increased 0.3% in April following a 0.2% decline in March. Excluding fuel, they were up 0.2%. Export prices rose 0.6% following a 0.3% gain in March. Excluding agriculture, they were up 0.7%.
Import prices are up 3.3% year over-year, versus up 3.6% for the 12-month period ending in April 2017. Excluding fuel, import prices are up 1.8% year-over-year compared to a 1.0% increase for the 12 months ending in April 2017. Export prices, meanwhile, are up 3.8% year-over-year, versus up 3.1% for the 12-month period ending in April 2017, and they are up 4.0% excluding agriculture versus up 3.0% for the 12 months ending in April 2017.
The key takeaway from the report is that overall import price pressures moderated on a year-over-year basis while nonfuel import prices remain at palatable levels on a year-over-year basis.