There isn't much more one can ask for following the first two trading sessions this week. The Nasdaq and the Russell 2000 have sprinted to new record highs while the Dow, S&P 500, and S&P 400 are on the doorstep of doing the same. Earnings results have been quite good and the New Home Sales Report for March (a piece of "hard" data) was stronger than expected.
The stock market, though, is always looking for more; however, it's not expected to find much at the start of today's trading considering the S&P futures are unchanged and are trading in-line with fair value.
For the time being, the market is waiting and watching -- and it may just maintain that disposition until 1:30 p.m. ET, which is when the Trump Administration is expected to discuss its tax reform plan.
Early reports suggest it will include a call for a 15% corporate tax rate, a 15% pass-through rate, a 10% tax rate on repatriated earnings, and a big increase in the standard deduction individuals claims on their taxes. It is not expected to include a provision for a border adjustment tax, yet it has been written that the door could still be left open to consider such a provision at a later time.
Notably, it has also been said that the plan won't be deficit-neutral at its birth, but that future economic growth will compensate for that delicate funding matter.
What is important to remember today is that this plan isn't going to be "the plan." The House and Senate will obviously have their say on matters. The real value of the plan today is that it will launch the debate on tax reform measures, allowing for the possibility that something could get done before the end of the year.
That notion has been a contributing factor in this week's relief rally, so the tax reform framework laid out today by the Trump administration may not necessarily create much of a spark for the stock market. Some reports suggest it might even cause a backflash if it offers more hype than substance.
It will be the main point of headline interest today and it already has been. There isn't much conviction at the moment despite a plethora of earnings reports since yesterday's close that have surpassed consensus estimates.
Granted there are some big individual movers, like Twitter (TWTR), which is up 11% after topping estimates, and U.S. Steel (X), which is down 17% after coming up well shy of estimates, yet the totality of the reports has not been a market mover.
That's an interesting subtext considering blue-chip companies like Procter & Gamble (PG), United Technologies (UTX), AT&T (T), Texas Instruments (TXN), PepsiCo (PEP), Norfolk Southern (NSC), Hershey (HSY), and Boeing (BA) have all released their March quarter results. None of those companies, by the way, fell short of consensus earnings estimates.
Separately, oil prices ($49.08, -$0.48, -1.0%) are coming up short at the moment as an inventory build for oil and gasoline stockpiles reported last night by the American Petroleum Institute has triggered some supply concerns. The Department of Energy releases its weekly inventory report at 10:30 a.m. ET today.
The last few sessions have been very kind to stocks, yet oil prices, down 1.1% this week, have been a notable laggard in the risk-on rally that has been predicated in part on thoughts of economic growth being better than feared.
The economic release calendar is light today, featuring only the Mortgage Applications Index, which was up 2.7% from a week ago. The offset to that positive headline number is that purchase applications were down 1%.
Applications to purchase stocks at the moment are also down. That could change before the day is done, yet the pre-market moment reflects a market content to catch its breath after a big run.