The stock market looks ready to start today’s session on a positive note, but it should surprise no one if the stock market ultimately ends today’s session on a flat note. That has been its modus operandi so far this week.
Entering today, the S&P 500 is down 0.1% after 26 hours of trading over the last four days. The lack of conviction at the index level, however, isn’t what it appears to be. Sellers have been busy bees below the surface.
Entering today, the Invesco S&P 500 Equal-Weight ETF (RSP) is down 1.1% for the week. The offset is that buyers have been busy bees among the mega-cap stocks. The Vanguard Mega-Cap Growth ETF (MGK) is up 1.1% for the week — and that has made the neutral difference at the market-cap weighted index level.
Currently, the S&P 500 future are up 12 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 17 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are up 103 points and are trading 0.3% above fair value.
Some rebound action in the regional bank stocks has helped boost trading sentiment while gains in Tesla (TSLA), Meta Platforms (META), Apple (AAPL), and Alphabet (GOOG) are providing some support, helping to mitigate modest losses in Microsoft (MSFT), Amazon.com (AMZN), and NVIDIA (NVDA).
There is also a bid to put a positive spin on the news that the meeting scheduled today for President Biden and congressional leaders to discuss the debt ceiling has been postponed until early next week. According to NBC News, a source said that can be seen as a positive development because staffers continue to negotiate.
It is good to know that talks are happening, but in this matter, talk is cheap. It is action to raise the debt ceiling that is required, and until that action happens, risk tolerance will be reined in.
That is what we have seen so far this week, too. Risk tolerance has been minimal; hence, the mega-cap stocks have outperformed on a safety trade tied to the their strong financial and market-leading positions.
Separately, something that has been weakening — other than most stock prices this week — are import and export prices.
April import prices were up 0.4% month-over-month but down 4.8% year-over-year. Excluding fuel, import prices were flat and down 1.9% year-over-year. Export prices increased 0.2% month-over-month and were down 5.9% year-over-year. Excluding agricultural products, export prices rose 0.2% and were down 6.3% year-over-year.
The key takeaway from the report is that it follows suit with the April CPI and PPI reports from earlier in the week, which showed a moderation in inflation pressures on a year-over-year basis.
There wasn’t much movement in the market on this news. Then again, there hasn’t been much movement this week at the index level where bees have been buzzing, working hard for the money if not the honey.
Originally Posted May 12, 2023 – Looking up at the open
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