It was a cookie-cutter start to the week for the stock market. Technology stocks and the Nasdaq Composite outperformed and the other indices rode those coattails to modest gains of 0.1%-0.2%. Those modest gains, however, could be dialed back at the start of today's trading.
The S&P futures are down three points, the Dow Jones Industrial Average futures are down 17 points, and the Nasdaq 100 futures are down 14 points. That leaves them all trading modestly below fair value.
There is a little bit of headline causality for the negative disposition. Specifically, both China and Germany reported weaker than expected trade data, with export and import activity for both countries decelerating from the prior month and falling short of consensus estimates.
Neither report undermined investor sentiment to any great degree. The Shanghai Composite ended its session up 0.1% while the DAX Index is currently down 0.4%.
Naturally, any weakening economic activity feeds into a belief that central banks will be slow to remove their policy accommodation; hence, traders fall back on the notion that bad news is good news for the low interest rate regime that has been instrumental in supporting global equity markets.
Market participants have been double dipping on low interest rates and strong earnings growth to drive the major indices in the U.S. to record highs. The Dow Jones Industrial Average and the S&P 500 both set new records yesterday.
In fact, Monday marked the ninth straight record close for the Dow Jones Industrial Average, which has risen 5.3% over the last three months and is up 11.9% year-to-date. That leaves it trailing the Nasdaq Composite (+18.6%), but ahead of the S&P 500 (+10.8%), S&P MidCap 400 (+5.6%), and Russell 2000 (+4.2%).
Apple's (AAPL) influence has lorded over them all, directly as a component or indirectly through its so-called halo effect. Shares of AAPL are up 37.1% year-to-date.
The point is that market participants have not had a strong compulsion yet to give up on the bull market despite many criticisms that it is overvalued and/or overbought and due for a short-term pullback or actual correction.
There has been another rush of earnings news since yesterday's close. Some of the notable disappointments were Avis Budget Group (CAR), Dean Foods (DF), Time (TIME), and Sykes Enterprises (SYKE). Some of the notable surprises were Michael Kors (KORS), Norwegian Cruise Line Holdings (NCLH), CBS Corp. (CBS), and Valeant Pharmaceuticals (VRX).
CVS Health (CVS) also beat second quarter estimates, but its third quarter guidance was disappointing.
Overall, the earnings news has been supportive, yet strong responses have been limited to individual stocks with smaller market-cap sizes so there hasn't been a distinct market-moving push from the earnings reporting.
The economic calendar is on the light side today. The JOLTS-Job Openings Report for June, which will be studied carefully by Fed Chair Yellen, will be released at 10:00 a.m. ET and is the only report of note.
Treasury prices are little changed ahead of that report, yet most capital markets are little changed at this juncture as market participants look content for now to let the action come to them instead of forcing the action ahead of the stock market's open.