Following the long weekend, the stock market has decided to be an early riser today. Currently, the S&P futures are up three points and are trading 0.2% above fair value.
The disposition of the futures market should translate into a modestly higher open for the cash market. Whether the upside bias holds is another question.
There will be a lot of attention paid to the market's performance today given that it failed to respond favorably on Thursday to otherwise reassuring earnings reports from JPMorgan Chase (JPM) and Citigroup (C). Some political apprehension seemed to play the role of spoiler there, as few traders saw any incentive to hold long positions in front of the extended weekend, which continues today for major European markets.
Their reticence was fixed on North Korea and the heightened potential for a diplomatic flare-up given the talk of North Korea possibly conducting a sixth nuclear test. That nuclear test didn't happen, yet North Korea did try to conduct a missile test of some kind, which failed shortly after launch.
In brief, North Korea is still a very hot geopolitical spot akin to a volcano that is rumbling beneath the surface and is creating angst about a possible eruption.
On a similar note, the upcoming French presidential election (the first round of voting is this coming Sunday) is akin to some tremors being felt near a major fault line. That doesn't mean an earthquake is imminent, yet there is a healthy level of respect for the possible damage that could be done if the election result favors an anti-EU candidate and creates a shift in the tectonic plate that is known as the European Union.
These items are still dangling before the market, which is hoping worst-case scenarios will be avoided but has nonetheless adopted a more defensive mindset in recent weeks.
The Retail Sales and CPI reports for March, which were released on Friday, didn't provide any boost to the prevailing sentiment of late. They were both weaker than expected, featuring an unchanged reading for retail sales excluding autos, and the first decline in core CPI (-0.1%), which excludes food and energy, since January 2010.
It was another good display of the dichotomy between "hard" data and "soft" data.
There will be an emerging display of hard earnings data this week as more companies release their first quarter results, including the likes of Netflix (NFLX), Bank of America (BAC), Goldman Sachs (GS), American Express (AXP), Johnson & Johnson (JNJ), UnitedHealth (UNH), IBM (IBM), Morgan Stanley (MS), Travelers (TRV), Verizon (VZ), Visa (V), and General Electric (GE).
The first quarter earnings reporting period is expected to be good, with S&P 500 earnings projected to increase 9.2%, according to FactSet. The market's reception of those results, though, is likely to be heavily influenced by the tenor of the political headlines at the time they are released. Last Thursday was a case in point.
The market has its head up right now, aided by the lack of any major upheaval over the long weekend and some pleasing Q1 GDP, retail sales, industrial production, and fixed asset investment data out of China.
Today's open should be higher, yet it's the close that will be watched more carefully by market participants.