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Last weekend the nation, and the world, was engrossed with the news that there was an assassination attempt on former President Trump. This past weekend, President Biden shocked the nation, and the world, with an announcement that he is dropping out of the 2024 presidential race and endorsing Kamala Harris for president.
The political scene right now is electric. What that ultimately means for the electorate in November remains to be seen, but the respective campaigning between now and then promises to be engaging.
To be clear, Kamala Harris still has to win her party's nomination, which is to say she is not yet the official Democratic candidate for president. Reports indicate that she is the frontrunner, but the element of surprise on the nomination front has not been removed at this juncture.
That uncertainty has not permeated the marketplace, at least not in an adverse way. The equity futures market is operating in a rebound gear and the Treasury market isn't reacting much.
Currently, the S&P 500 futures are up 34 points and are trading 0.7% above fair value, the Nasdaq 100 futures are up 200 points and are trading 1.1% above fair value, and the Dow Jones Industrial Average futures are up 73 points and are trading 0.2% above fair value. The 2-yr note yield is up one basis point to 4.52% and the 10-yr note yield is down two basis points to 4.22%.
The outperformance of the Nasdaq 100 futures could be interpreted by some as a nod toward the political uncertainty since it is being driven by the mega-cap stocks, which are regarded by many to be defensive plays because of their industry-leading positions, balance sheet strength, and generally dependable earnings growth.
That point aside, the Vanguard Mega-Cap Growth ETF (MGK), which we'll characterize as a proxy for the group, has dropped 5.8% from its high on July 10, so it is unclear if the bid this morning is forged in the political uncertainty or simply a buy-the-dip bid.
It is fair to say that it is probably a little of both, but in either case it spells good things for index performance at the start of today's trading.
The interesting things to watch today will be whether this rebound trade at the open persists, whether it proves to be only a mega-cap rebound effort, or whether the broader market also comes along for the rebound ride. Recall that just about everything fell prone to consolidation interest at the end of last week.
There isn't much corporate news of note to get things going today and there isn't any U.S. economic data of note on today's calendar. Tomorrow will feature the June Existing Home Sales Report, but the June Personal Income and Spending Report on Friday will be this week's headliner because it includes the PCE Price Index and Core-PCE Price Index, which are the Fed's preferred inflation gauges.
