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There isn't much conviction in the equity futures trade this morning just like there wasn't much conviction behind yesterday's trade in the cash market.
Currently, the S&P 500 futures are up three points and are trading in-line with fair value, the Nasdaq 100 futures are down 10 points and are trading fractionally below fair value, and the Dow Jones Industrial Average futures are up 63 points and are trading 0.1% above fair value.
This has the markings of a wait-and-see trade with respect to today's price action, which seems likely to revolve once again around the performance of the mega-cap stocks. They carried the day yesterday, so to speak, and it was some heavy lifting given the general feeling of lethargy across the broader market.
Arguably, there is some fatigue related to the vacillation over reciprocal tariffs. President Trump, according to Bloomberg, said he doesn't want too many exceptions for reciprocal tariffs, but that he would probably be more lenient than reciprocal.
There seems to be a tariff cloud hanging over the market, yet it is unclear if it is a rain cloud or simply a cotton puff cloud. Barclays for its part cut its S&P 500 price target to 5,900 from 6,600, citing tariff risks and weakening data.
The trade tension also has some geopolitical overtones. CNBC reported that the U.S. has placed more than 50 Chinese companies on a blacklist of export restrictions for advanced computing capabilities.
The macro outlook, therefore, remains cloudy, which is why the market isn't charging full speed ahead with a rebound effort. Earnings growth prospects remain in question because economic growth prospects remain in question.
On that note, new orders for manufactured durable goods increased 0.9% month-over-month in February (Briefing.com consensus -1.2%) following an upwardly revised 3.3% (from 3.1%) for January. Excluding transportation, durable goods orders rose 0.7% month-over-month (Briefing.com consensus 0.1%) following an upwardly revised 0.1% increase (from 0.0%) in January.
The key takeaway from the report is that durable goods orders were stronger than expected; however, that understanding was clouded by the added realization that there was a downturn in business spending, evidenced by the 0.3% decline in nondefense capital goods orders, excluding aircraft.
The 2-yr note yield is up one basis point to 4.01% and the 10-yr note yield is up four basis points to 4.35%.
