Monday was a rock 'n roll session for the stock market. The rocking part came early as the major indices partied on the news of the passage of the Senate GOP's tax bill and then it rolled later on the back of the party-pooper trade that broadsided the tech sector and weighed on the broader market.
The S&P 500, up 0.9% at its high on Monday, ended the session down 0.1%. The Russell 2000, up 1.5% at its high on Monday, ended the day down 0.3%. The Nasdaq Composite, up 0.8% in the early going, finished down 1.1%.
The Dow Jones Industrial Average was the sole winner, yet its 0.2% gain paled in comparison to the 1.3% gain it had registered at its high point.
Not surprisingly, there are some buy-the-dip tendencies availing themselves in the futures market this morning, but at the same time, it can be said that the early conviction among buyers is questionable.
The S&P futures are up four points, the Nasdaq 100 futures are up five points, and the Dow Jones Industrial Average futures are up 54 points. Those indications leave the major indices on track to start today's session higher by 0.1% to 0.3%.
What every trader is watching to see is how the tech sector behaves and what the broader market's response to that behavior is. Will the blue chip and value stocks diverge or will they fall into line and go the way of the tech sector?
There is a smattering of news items to keep market participants entertained as they await the answer.
Ascena Retail Group (ASNA) and Toll Brothers (TOL) are both trading down sharply in pre-market action following their disappointing earnings reports and/or outlook; HD Supply Holdings (HDS) is up 6.4% after its earnings report; Bank of America (BAC) has jumped 1.0% on its announcement of a new $5 billion share repurchase plan; and Mastercard (MA) is up 0.9% after raising its dividend 14% and announcing a new $4 billion share repurchase program.
Separately, Regal Entertainment Group (RGC) has agreed to be acquired by Cineworld, the U.K.'s largest cinema operator, for $5.9 billion, or $23.00 per share, in cash.
There are the requisite reports from various news agencies that the negotiations between the House and Senate on their respective tax bills aren't expected to be easy. That isn't news, however, so those reports are not market moving.
The trade balance report for October wasn't all that market moving either even though it was a bit weaker than expected.
The trade deficit widened to $48.7 billion (Briefing.com consensus -$47.4 billion) from a downwardly revised $44.9 billion (from -$43.5 billion) in September. The widening deficit was the result of exports being down less than $0.1 billion from September exports and imports being $3.8 billion more than September imports.
The key takeaway from the report is that trade will be accounted for as a negative input in fourth quarter GDP models considering that the real trade deficit of $65.3 billion is 5.3% higher than the third quarter average real trade deficit of $62.0 billion.
The ISM Services Index for November (Briefing.com consensus 59.3; prior 60.1) will be released at 10:00 a.m. ET, which is the same time the Senate Banking Committee will convene to consider the nomination of Jerome Powell for Fed chairman.
This is all background stuff or traders. What's in their forethought is the tale of the tape after they got rocked and rolled on Monday.