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There is Nike's (NKE) earnings report; there is the presidential debate; and there is this morning's Personal Income and Spending Report for May.
Take your pick in terms of your market mover. They are all playing a part to one degree or another along with the newly reconstituted Russell indices that will take effect after the close.
In brief, Nike's FY25 sales outlook was very disappointing, a view that is clear to see in the 16% decline in its stock price; Politico is reporting that Democrats are actively considering replacing President Biden on the Democratic ticket after his debate performance; and the Personal Income and Spending Report was market friendly.
Briefly, personal income increased 0.5% month-over-month in May (Briefing.com consensus 0.4%) following a 0.3% increase in April and personal spending increased 0.2% month-over-month (Briefing.com consensus 0.3%) following a downwardly revised 0.1% increase (from 0.2%) in April.
The PCE Price Index was unchanged on the heels of a 0.3% increase in April, leaving it up 2.6% year-over-year versus 2.7% in April. The core-PCE Price Index, which excludes food and energy, was up 0.1% month-over-month after a 0.3% increase in April, leaving it up 2.6% year-over-year versus 2.8% in April.
The key takeaway from the report is that it was right on the mark with numbers supporting a soft landing and moderating inflation, which will keep alive the market's hope for a Fed rate cut before the November election.
The Treasury market responded positively to the news, as one might expect, and the equity futures market followed suit.
The 2-yr note yield, at 4.72% just before the release, fell to 4.68%. The 10-yr note yield, at 4.30% just before the release, fell to 4.26%. Currently, the S&P 500 futures are up 12 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 44 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are up 17 points and are trading fractionally above fair value.
Those indications put the cash indices on track for a higher start. What remains to be seen is the market's complexion at the open. Will it be a narrowly-led advance paced by the mega-cap stocks or will it be a broad market advance? That has been the question of late for a market that has been led to record-high levels predominately by mega-cap stocks.
The ingredients are in place for a broad market advance -- lower rates, easing inflation, positive real spending, and rate-cut expectations -- but now the market has to do the cooking in front of the first round of France's snap election this weekend.
