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The stock market fluttered through yesterday's trade, unable to build on the big rally that followed the CPI report on Wednesday. The lull in the rebound action, though, is giving way this morning to a delayed follow-through move.
Currently, the S&P 500 futures are up 43 points and are trading 0.7% above fair value, the Nasdaq 100 futures are up 285 points and are trading 1.3% above fair value, and the Dow Jones Industrial Average futures are up 237 points and are trading 0.5% above fair value.
The positive bias is rooted in several factors, not the least of which is the positive price action in most mega-cap stocks. Apple (AAPL) is a standout in that regard, trading 1.3% higher after suffering its worst day yesterday since August.
The weight of these gains matters for the major indices, but so do sliding Treasury yields, better-than-expected retail sales, industrial production, and GDP data out of China, and the speculative energy surrounding President Trump's arrival to the White House on Monday.
Crypto loyalists are undoubtedly bulled up by that arrival, especially with Bloomberg reporting that President Trump is planning an executive order to declare cryptocurrency a national policy priority. Other reports indicate he will be quick to announce executive orders on many priorities such as border security and tariffs.
Markets will be closed Monday for Martin Luther King, Jr. Day. When they reopen Tuesday, a new administration will be officially driving policy.
For now, the equity futures are cruising, leaving the S&P 500 on track to push above its 50-day moving average (5,966) at today's open. The 50-day moving average has been a key resistance point, so it will be deemed a good signal for the short-term trend if the market can manage a close above that level today.
A 10-yr note yield at 4.58%, versus 4.80% at its peak on Tuesday, has been a key source of support for the stock market's revival. Notably, the Treasury market didn't revolt following a stronger than expected Housing Starts and Building Permits Report for December.
Total housing starts increased 15.8% month-over-month in December to a seasonally adjusted annual rate of 1.499 million units (Briefing.com consensus 1.318 million). Total building permits were down 0.7% month-over-month to a seasonally adjusted annual rate of 1.483 million (Briefing.com consensus 1.454 million).
The key takeaway from the report is that there were gains in single-unit starts (+3.3%) and single-unit permits (+1.6%), which is encouraging for a housing market that needs new supply to compensate for the limited inventory in the existing home market.
