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The drive for five is on during an options expiration day that Goldman Sachs says is the biggest May expiration ever, according to CNBC. That would be five straight winning sessions for the S&P 500, which has gained ground each day this week in the wake of the U.S.-China tariff de-escalation and some good, old-fashioned momentum trading.
Currently, the S&P 500 futures are up 12 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 29 points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are up 96 points and are trading 0.2% above fair value.
There is some positive price action in the mega-cap space that is helping to support the futures trade, along with a bit of M&A buzz following the news that Charter Communications (CHTR) will acquire Cox Communications in a transaction that values Cox at an enterprise value of $34.5 billion.
Another support factor has been the retrenchment in Treasury yields. The 2-yr note yield, which climbed to 4.06% on Wednesday, is at 3.94% this morning, down three basis points from yesterday's settlement. The 10-yr note yield, which topped 4.54% on Wednesday, is at 4.40% this morning, down six basis points from yesterday's settlement.
Some pleasing PPI data on Thursday, a stronger dollar, and some technical resistance at the 4.50% level have contributed to the reversal.
A relatively soft Housing Starts and Building Permits Report for April this morning has kept selling efforts in check.
Total housing starts increased 1.6% month-over-month in April to a seasonally adjusted annual rate of 1.361 million units (Briefing.com consensus 1.383 million), yet single-unit starts dropped 2.1%. Total building permits were down 4.7% month-over-month in April to a seasonally adjusted annual rate of 1.412 million (Briefing.com consensus 1.450 million), yet single-unit permits were down 5.1% and driven by declines in all regions.
The key takeaway from the report is the weakness in single-unit permits across all regions, as it speaks to cautious-minded consumers and builders dealing with higher prices, higher mortgage rates, and higher building costs.
The import and export price indexes for April were released at the same time. Import prices were up 0.1% month-over-month and up 0.1% year-over-year. Export prices were also up 0.1% month-over-month and up 2.0% year-over-year. Overall, the report suggests inflation pressures remained in check for import and export prices in April.
At 10:00 a.m. ET, the preliminary University of Michigan Consumer Sentiment Report for May (Briefing.com consensus 55.0; prior 52.2) will be released. This will be a closely watched report to see if it reveals improved consumer attitudes about personal finances and inflation following the 90-day pause for reciprocal tariff rates and sharp recovery in the stock market.
