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The stock market walked the middle ground yesterday, unable to be pulled lower by the geopolitical worries and unable to be pulled higher by the soft landing hues that colored the ADP Employment Change Report for September. The S&P 500 finished the day +0.01%.
There is some cautious-minded stepping today, too.
Currently, the S&P 500 futures are down 13 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 75 points and are trading 0.3% below fair value, and the Dow Jones Industrial Average futures are down 145 points and are trading 0.3% below fair value.
The same variables are in place today, only the ADP report has been replaced by the initial and continuing jobless claims data.
Briefly, initial jobless claims for the week ending September 28 increased by 6,000 to 225,000 (Briefing.com consensus 223,000) while continuing jobless claims for the week ending September 21 decreased by 1,000 to 1.826 million.
The key takeaway from the report is that initial jobless claims, a leading indicator, remain well below recession-like levels (the average of initial claims for the last five recessions, excluding the COVID recession, was 458,000), imparting an encouraging understanding that the labor market might be bending but it isn't breaking.
The 2-yr note yield is up three basis points to 3.67% and the 10-yr note yield is up three basis points to 3.82%.
We'll get a more complete view of the labor market when the September Employment Situation Report is released before Friday's open.
That report is expected to go a long way toward shaping the market's expectations for the pace and scope of the Fed's easing efforts. That is partly why there is still some cautious-minded stepping this morning.
Other influences include the ongoing dockworkers strike, the ongoing Boeing (BA) machinists strike, the ongoing uncertainty about how Israel might respond to Iran's missile attack, and the specter of the September ISM Services PMI (Briefing.com consensus 51.6%; prior 51.5%) at 10:00 a.m. ET.
Fortunately, there is also some ongoing enthusiasm for the AI growth story. NVIDIA (NVDA) CEO, Jensen Huang, told CNBC after the close that demand for the company's Blackwell graphics processing unit is "insane." NVIDIA has a nearly $3 trillion market capitalization, so that's not a huge surprise, but it has been a welcome reminder nonetheless. Shares of NVDA are up 1.8% in pre-market trading.
NVIDIA's strength is helping to offset some softness in other mega-cap stocks, but as the standing of the equity futures market suggests, it hasn't been enough to offset the generally cautious view coming into this morning that has also been informed by the full, if not rich, valuations seen in many stocks.
There are also some gyrations in the currency market that are commanding some added attention, only it doesn't pertain to the yen. Today, it is the British pound that is in focus. It is down 1.2% against the dollar after Bank of England Governor Bailey said in a newspaper interview that the central bank can be more aggressive with cuts if inflation remains subdued.
