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The stock market looks poised to ease into the start of this week, much like it eased into the end of last week. The difference today, versus Friday, is that the easing favors some upside action.
Currently, the S&P 500 futures are up 13 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 61 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are up 52 points and are fractionally above fair value.
The indices took a modest dip on Friday, although the Russell 2000 (-1.1%) went a little further into the deep end. The losses occurred after what had been a very good rebound week that saw the market get some added pep in its step following the Fed's decision to cut the target range for the fed funds rate by 50 basis points instead of 25 basis points.
The enthusiasm was rooted in the belief that this was a proactive move to secure the economy's soft landing. A lot of stocks channeled that thinking, as the Dow Jones Industrial Average, S&P 500, and equal-weighted S&P 500 logged new record highs.
Market participants don't appear ready to be sellouts just yet, although there is some appreciation for the possibility that a market trading with a rich valuation (S&P 500) and a market trading with a full valuation (equal-weighted S&P 500) could experience a consolidation period.
Visions of further rate cuts, though, remain a supportive factor. To that end, the equity futures market has tolerated some otherwise disappointing flash PMI readings for September out of the eurozone. Why? Because they have increased the possibility of a rate cut by the ECB at its October meeting.
Tellingly, Germany's DAX Index is up 0.6% after a flash manufacturing PMI reading of 40.3 that was below expectations (42.4), below last month's reading (42.4), and below the 50.0 line that demarcates expansion and contraction.
The preliminary S&P Global U.S. Manufacturing PMI and Services PMI readings for September will be released at 9:45 a.m. ET.
Gains in several mega-cap stocks are another support factor in what has been a relatively slow morning for corporate news. Meta Platforms (META) and Tesla (TSLA) are both up more than 1.0%.
Some news items of added interest include a Wall Street Journal report that Taiwan Semiconductor Manufacturing Company (TSM) and Samsung are considering new chip-making facilities in the United Arab Emirates; a Bloomberg report that Apollo (APO) may invest in Intel (INTC); and a warning from Southwest Airlines (LUV) to its employees that there will be "some tough decisions in coming days" as it works to restore profitability, according to Bloomberg.
