The futures market isn't much help this morning -- at least not for anyone looking for a strong directional bias at the open. As it stands now, the futures market is signaling a flattish start for the major indices.
The S&P futures are down three points and are trading slightly below fair value. The Nasdaq 100 futures are down 11 points and the Dow Jones Industrial Average futures are down 13 points.
We're interested to see where this market goes today considering the futures market provided a directional head fake before the open on both Monday and Tuesday.
To wit, the futures market pointed to a positive start on Monday, which is what happened, and then there was selling into the strength. On Tuesday, the futures market pointed to a negative start, which is what happened, and then there was buying on the dip.
The pre-open trading action in the futures market is of course just an indication for how things will start. It has no bearing on how things will end.
By and large, though, the stock market has exhibited a bullish bias this week, having been steered by some familiar leadership, namely the information technology and consumer discretionary sectors, which are both up 1.2%. Coincidentally, Apple (AAPL) and Amazon.com (AMZN) are up 1.2% and 1.8%, respectively.
The energy sector, which is up 1.0%, has also provided a helping hand, having been bolstered by oil prices ($70.03, +$0.78, +1.1%) that have moved up in response to supply concerns linked to sanctions on Iranian sell through and the feared throughput of Hurricane Florence.
Strikingly, a 0.4% increase in prices for final demand energy in August didn't inflate the Producer Price Index for final demand. The latter declined 0.1% in August (Briefing.com consensus +0.2%) and so did the index for final demand, less food and energy (Briefing.com consensus +0.2%).
The decline in the final demand index was attributed to a 0.1% decrease in prices for final demand services, which was led by a 0.9% decline in the index for final demand trade services, which measures changes in margins received by wholesalers and retailers. The index for final demand goods was unchanged.
The key takeaway from the report is that it will soothe some burgeoning inflation concerns, as the monthly declines led to a moderation in producer price inflation on a year-over-year basis. The latter point notwithstanding, the market is apt to maintain its view that the Federal Reserve remains on course to raise rates two more times this year.
On a year-over-year basis, the index for final demand was up 2.8%, versus 3.3% in July, while the index for final demand, less food and energy ("core PPI"), was up 2.3% versus 2.7% in July.
The yield on the 10-yr Treasury note is down two basis points to 2.96%, yet that gain was already in place in front of the PPI report, so it's fair to say the report itself didn't move the market much after its release.
Separately, Apple (AAPL) will be a focal point today. The company is holding a product event which is slated to start at 1:00 p.m. ET and expected to feature the announcement of three new iPhones. Investors will be listening intently for the iPhone form factors and pricing information.
With the move Apple made yesterday in front of the announcement, investors seem to be expecting some encouraging news.
Today's trade headlines have produced a twinge of encouragement as well. Canada is reportedly open to giving the U.S. limited access to its dairy market, yet nothing has been announced officially. On the flip side, there is nothing encouraging to report as it relates to U.S.-China trade relations.
There is still a lot of waiting and watching on the trade front, which is apropos since there is going to be some waiting and watching on the trading front when the opening bell rings. Semiconductors will be a key area to watch, too, after Goldman Sachs downgraded Micron (MU) and Lam Research (LRCX) to Neutral from Buy.
Those stocks could be weak at the start, yet the futures market is presaging a broader market that will be little changed.