A significant portion of what the major indices lost on Wednesday is going to be recouped at the start of today's trading.
The S&P futures are up 17 points and are trading 0.5% above fair value. The Nasdaq 100 futures are up 44 points and the Dow Jones Industrial Average futures are up 202 points.
Market participants are apparently assigning some high value to the idea that President Trump has suggested everything is hunky-dory among NATO members after he succeeded in winning commitments from other NATO members to increase their defense spending.
Those commitments have supposedly quieted the hyperbole about the possibility of the U.S. withdrawing from NATO.
Separately, there is some buzz about the U.S. and China potentially sitting down to discuss trade matters. That's a recycled report from yesterday, however, so it's a stretch to put too much stock in that idea as the basis for this morning's rally given that it didn't seem to help much at all on Wednesday when the S&P 500 declined 0.7%.
In any event, the market woke up on the right side of the pillow for one reason or another that has enabled it to set aside negative thoughts for the time being.
A spate of M&A activity has provided some support. Comcast (CMCSA) raised its offer for Sky, and Broadcom (AVGO) is acquiring CA, Inc. (CA) for $18.4 billion in cash, or $44.50 per share, which is a 20% premium over Wednesday's closing price.
There has also been a bounce back in airline stocks after Delta (DAL) topped second quarter earnings expectations. It will be interesting to see if that rebound effort persists considering Delta also lowered its fiscal 2018 EPS outlook, citing higher fuel costs.
Remember, though, the market seems to be focusing on the positive, and not the negative, this morning.
The same rings true for the Consumer Price Index for June.
The positive is that total CPI was up 0.1% in June, which was less than expected (Briefing.com consensus +0.2%), while core CPI, which excludes food and energy, was up 0.2%, as expected.
The negative is that total CPI was up 2.9% year-over-year, which is the largest 12-month increase since February 2012. Core CPI was up 2.3% year-over-year, versus 2.2% in May.
The key takeaway from the report is that consumer inflation is picking up and giving the Federal Reserve the data-based cover it is seeking to continue raising the fed funds rate.
Separately, the initial jobless claims data is also providing that cover with respect to the employment side of the Fed's dual mandate.
Initial claims for the week ending July 6 decreased by 18,000 to 214,000 (Briefing.com consensus 225,000). Continuing claims for the week ending June 30 decreased by 3,000 to 1.739 million.
The key takeaway from the report is that the low level of initial claims reflects a hesitancy on the part of employers to cut workers in an environment where end demand is solid and where it is becoming increasingly difficult to find qualified workers to fill higher-skilled positions.
Treasuries are weaker across the curve. Most securities are up two to three basis points in yield and the 2s10s spread stands at just 26 basis points, which is the narrowest since August 2007.
The major equity indices, meanwhile, will be up in price when the opening bell rings on what is expected to be a wide berth of buying interest.