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There was a stark and well-managed reversal in the stock market yesterday that saw the major indices rebound smartly from large losses. NVIDIA (NVDA) led the recovery charge, gaining more than 8% following some enthusiastic AI comments from its CEO at an investment conference that triggered a buy-the-dip coattails rally in related stocks.
For the most part, it was a mega-cap/tech stock turnaround effort, but breadth broadened out as the algorithms kept a steady bid in the market.
It helped, too, that the S&P 500 in its early retreat held above last Friday's low of 5,402. In doing so, a technical charge was sparked that carried the market back above its 50-day moving average (5,406) into the close.
The rebound bid has lost some steam this morning, but it's not as if sellers have aggressively wrested control of matters either.
Currently, the S&P 500 futures are up six points and are trading 0.1% above fair value, the Nasdaq 100 futures are down one point and are trading fractionally above fair value, and the Dow Jones Industrial Average futures are up 36 points and are trading 0.1% above fair value.
There is a hodgepodge of corporate news, yet the equity futures trade has been governed mostly by macro news and a bit of sentiment.
The sentiment end is tied into some hope that yesterday's reversal will carry on today. The macro element is linked to some key economic news and the residual news that the ECB cut rates as expected, lowering its deposit facility rate by 25 basis points to 3.50% and its marginal lending facility rate and main refinancing rate by 60 basis points each to 3.90% and 3.65%, respectively.
For the economic news;
- Initial jobless claims for the week ending September 7 increased by 2,000 to 230,000 (Briefing.com consensus 229,000). Continuing jobless claims for the week ending August 31 increased by 5,000 to 1.850 million.
- The key takeaway from the report is that initial jobless claims remained fairly steady, underscoring the point that the labor market isn't suffering a material and rapid erosion that would challenge the soft landing view.
- The Producer Price Index for August was up 0.2% month-over-month (Briefing.com consensus 0.2%) following a downwardly revised 0.0% (from 0.1%) in July. The Producer Price Index, excluding food and energy, was up 0.3% month-over-month (Briefing.com consensus 0.2%) following a downwardly revised 0.2% decline (from 0.0%) in July. On a year-over-year basis, the Producer Price Index was up 1.7%, versus 2.1% in July, and the Producer Price Index, excluding food and energy, was up 2.4%, versus 2.3% in July.
- The key takeaway from the report is the recognition that inflation at the wholesale level is moderating, which lessens concerns about heightened pass-through pressures to the consumer.
The 2-yr note yield, at 3.66% in front of the releases, fell to 3.62% and is at 3.64% now. The 10-yr note yield, at 3.67% in front of the releases, fell to 3.64% and is at 3.65% now.
