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Briefing.com Summary:
*The stock market is in position for a rebound trade at today's open.
*Oil prices have settled down some, aided by the U.S. Navy's willingness to escort tankers through the Strait of Hormuz if necessary.
*The ADP Employment Change for February was better than expected, but it wasn't strong.
There hasn't been a lack of volatility this week, as the twists and turns of the Iran conflict have taken capital markets for a ride. All things considered, stocks have held up quite well. The market cap-weighted S&P 500, S&P MidCap 400, and the Russell 2000 are all down "just 0.9%."
Those losses will be curtailed at today's open, too. Currently, the S&P 500 futures are up 27 points and are trading 0.4% above fair value, the Nasdaq 100 futures are up 138 points and are trading 0.6% above fair value, and the Dow Jones Industrial Average futures are up 152 points and are trading 0.3% above fair value.
Although the major indices finished lower yesterday, they finished well off their lows of the session. That comeback was aided by President Trump's acknowledgment that the U.S. Development Finance Corporation has been directed to provide insurance to carriers operating in the Persian Gulf after private insurers pulled coverage due to the conflict with Iran. He also indicated that the U.S. Navy could begin escorting tankers through the Strait of Hormuz if necessary.
That announcement tempered the spike in oil prices that has persisted today, with Treasury Secretary Bessent telling CNBC that the administration will be making a series of announcements to mitigate the rise in oil prices. WTI crude futures are down 0.8% to $73.94/bbl.
There has also been chatter that Iranian operatives have reached out to the C.I.A. to discuss terms for ending the conflict, but so far the U.S. reportedly remains dubious of those intentions.
Regardless, there is less angst in the pre-open trade than there has been all week. One market, though, that remained as nervous as ever was South Korea's Kospi Index. It plunged 12.1%, the largest decline ever, on the heels of a 7.2% decline on Tuesday amid forced selling in margin accounts that had been riding the momentum of the memory trade. Going into this week, the Kospi was up 48% year-to-date.
Asian markets, in general, were weak, with escalating energy costs fueling concerns about inflation, rate hikes, and slower growth. European bourses have taken a different line today. Most are up between 1.0% and 2.0%. That disposition has aided the pre-market tone here, along with a 1.2% gain in NVIDIA (NVDA), a 1.9% gain in Tesla (TSLA) after BofA Securities reinstated coverage with a Buy rating, and a better-than-expected ADP Employment Change Report for February.
Briefly, private sector employment increased by 63,000 jobs (Briefing.com consensus: 42,000) following a downwardly revised 11,000 increase (from 22,000) in January. The job increases were concentrated in the construction (19,000) and education/health services (58,000) industries and were rooted in small establishments (60,000).
This wasn't a strong employment report, but the better-than-expected growth in the headline number came at an opportune time for a market angling to ply a rebound trade.
The Final S&P Global U.S. Services PMI for February (prior 52.3) will be released at 9:45 a.m. ET, and the February ISM Non-Manufacturing Index (Briefing.com consensus: 53.9%; prior 53.8%) will follow at 10:00 a.m. ET. The release of the Fed's Beige Book at 2:00 p.m. ET will round out today's economic news.
The 2-yr note yield is up one basis point to 3.51%, the 10-yr note yield is unchanged at 4.06%, and the U.S. Dollar Index is down 0.3% to 98.81.
