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The major indices enjoyed a bounce on Monday from last week's large losses. It was a bounce from what some described as a short-term oversold condition. Accordingly, some mega-cap stocks and the cyclical stocks, which were left behind last week, took the lead in the rebound trade.
It had the markings of being a mechanical rebound trade. To that end, the Dow, Nasdaq, and S&P 500 all finished the day 1.2% higher. The Russell 2000 trailed with a more modest 0.3% gain.
The bid this morning is subdued, but still there.
Currently, the S&P 500 futures are up 18 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 73 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 46 points and are trading 0.1% above fair value.
Those indications, if they hold, will translate to modest gains at the open. Support has been provided by Oracle (ORCL), which is up 8.5% after reporting better than expected fiscal Q1 earnings and announcing a strategic partnership with Amazon Web Services.
Oracle's influence has been offset somewhat by a 0.7% drop in Apple (AAPL) following the news that it lost a €13 billion back-tax bill ruling in the EU Court of Justice. That news paired coincidentally with Alphabet (GOOG) seeing a €2.4 billion fine upheld by the EU Court of Justice. Shares of GOOG, though, are up 0.6% in pre-market trading.
Other drags include a mixed trade report out of China that featured a stronger than expected 8.7% year-over-year increase in exports and a weaker than expected 0.5% year-over-year increase in imports, and Goldman Sachs (GS) CEO David Solomon suggesting trading revenue is likely to drop 10% in the third quarter amid a more challenging macro environment, according to Reuters.
In brief, there isn't a lot of conviction behind the equity futures trade. That has to do in part with some hesitancy in front of tonight's presidential debate and some hesitation to see if there will be follow through on yesterday's rebound effort.
Treasuries are also subdued, with an eye on today's $58 billion 3-yr note auction at 1:00 p.m. ET and Wednesday's 8:30 a.m. ET release of the August Consumer Price Index. The 2-yr note yield is down one basis point to 3.66% and the 10-yr note yield is unchanged at 3.70%. The U.S. Dollar Index is little changed at 101.61.
