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Briefing.com Summary:
*Tesla, M&A news, rate-cut optimism, and tariff hopes boost market tone.
*Mega-cap stocks leading rebound effort.
*Probability of 25-basis-point rate cut at September meeting climbs to 85.5%.
There is a buy-the-dip effort underway to begin the week. The comeback effort is being led by the mega-cap stocks (naturally) and, arguably, some optimism about the potential for the Fed to cut its policy rate soon. There was little question on Friday that the market was thinking along those lines.
The 2-yr note yield plunged 25 basis points to 3.70%, and the probability of a 25-basis-point rate cut at the September FOMC meeting went from 37.7% to north of 80%. It is currently at 85.5%, according to the CME FedWatch Tool.
That rate-cut optimism, however, did not prevail in the market on Friday. Instead, stock prices got rolled back on some shock treatment related to the large downward revisions to nonfarm payrolls for May and June that left participants questioning if the economy and earnings prospects are as good as previously thought.
That consideration was the primary catalyst for the losses; meanwhile, the announcement of higher tariff rates for many countries, starting August 7, acted as an additional excuse for market participants to take some money off the table.
This morning, though, the table is set for a higher start.
The S&P 500 futures are up 35 points and are trading 0.5% above fair value, the Nasdaq 100 futures are up 191 points and are trading 0.8% above fair value, and the Dow Jones Industrial Average futures are up 194 points and are trading 0.4% above fair value.
The Magnificent 7 are all higher in pre-market trading, with gains ranging from 0.6% to 2.3%. Tesla (TSLA) is the lead horse in that range, trading up after the company announced that it has approved an award of 96 million shares of restricted stock to Elon Musk.
This cohort is providing the fuel for the major indices, which are also drawing support from some M&A activity, highlighted by Amphenol's (APH) acquisition of Commscope's (COMM) Connectivity and Cable Solutions segment for $10.5 billion in cash, and some hopeful comments out of Canada about striking a deal with the U.S. to lower tariffs.
There isn't any earnings news or economic data that is responsible for moving the needle much this morning. Berkshire Hathaway (BRK.B), which is down 1.1% after reporting a 4% decline in its operating profit and a $3.8 billion write-down for a loss in its Kraft-Heinz (KHC) stake, is a detractor of sorts.
The June Factory Orders Report (Briefing.com consensus: -5.1%; prior 8.2%) is the lone economic release on today's calendar.
Separately, Treasuries are calm after their busy day on Friday. The 2-yr note yield is down one basis point to 3.67%, and the 10-yr note yield is down two basis points to 4.20%.
