The S&P futures are up four points and are trading 0.2% above fair value. The Nasdaq 100 futures are up 14 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 18 points and are trading 0.1% above fair value.
That's a bland introduction to today's note, primarily because there isn't a lot of color in the brush strokes that have painted that slightly positive bias.
The trading picture, however, is going to get more vivid later today when the Federal Reserve releases an updated policy directive at 2:00 p.m. ET along with updated economic and policy rate projections. A press conference to explain the Fed's thinking will follow at 2:30 p.m. ET and will be governed by Fed Chairman Powell.
With respect to the directive, it is expected to include an indication that the Federal Open Market Committee (FOMC) voted unanimously to raise the target range for the fed funds rate from 1.75% to 2.00% to 2.00% to 2.25%.
The directive seems certain to highlight the improvement in the economy and the tightening in the labor market. What is uncertain is whether the directive will continue to describe the policy stance as "accommodative," whether there is a nod to the risk of trade protectionism, and whether the policy rate projections feature an expectation for more rate hikes than the market currently expects.
To this point, the stock market has adopted the favorable line that rising policy rates are a reflection of a stronger economy, which is good for corporate earnings. There is no telling right now, though, how the market will react to the totality of today's monetary policy decision and outlook.
You'll know it when you see it, which is why any trading action leading up to the FOMC affair should be taken lightly and understood to be subject to meaningful change -- either good or bad.
For the time being, there is some earnings news to distract the market. Nike (NKE), KB Home (KBH), CarMax (KMX), and Cintas (CTAS) all reported their latest quarterly results.
The responses have been mixed and it is Dow component Nike that has drawn the most media attention. That's understandable given Nike's brand power, yet is borne mostly from the understanding that Nike is down 2.4% following its report.
The initial reaction has been deemed by some analysts to be a sell-the-news response given that Nike had been rallying ahead of its report, topped consensus estimates, and maintained its full-year outlook. One blemish reportedly is that the company's gross margins were a little light of expectations.
Nike's weakness, though, is expected to be offset by IBM (IBM), which is up 1.7% in pre-market action after UBS upgraded the stock to Buy from Neutral.
Separately, things remain restless on the trade front. There are no new developments between the U.S. and China, but it is being reported that the U.S. will push for a Mexico trade deal only if a NAFTA deal with Canada isn't reached in the next few days.
Today's featured economic release is the New Home Sales Report for August (Briefing.com consensus 630,000; Prior 627,000). That report will be released at 10:00 a.m. ET. It could provide a trading catalyst, but it won't complete today's trading picture, which is waiting to be filled in with the views of the Federal Reserve.