There hasn’t been a lot of buying conviction in the equity futures trade this morning, yet the larger point we suppose is that there hasn’t been any real selling interest either.
Our assumption is that traders were enthused by how the stock market closed yesterday (on an upswing) more so than they were put off by how it opened (on a downswing). The inference is that it was clear to see in yesterday’s trade that the buy-the-dip inclination is still alive and well.
That view has carried over, albeit to a modest degree, this morning.
Currently, the S&P 500 futures are up five points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 14 points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are up 12 points and are trading fractionally above fair value.
Apple (AAPL) has been a bit of a beacon for the buy-the-dip trade. Entering yesterday’s trade, it had fallen in five consecutive sessions. It traded lower off yesterday’s open (along with most stocks) but then rebounded (along with most stocks) and ended the day higher. It is currently up 0.5% in pre-market trading.
Other mega-cap stocks are sporting modest gains, which is obviously a helpful factor for the broader market on a day that is lacking corporate news with market-moving cachet.
Granted there has been a lot of corporate news since yesterday’s close, most of which is earnings related, yet none of it has a macro pull to it. Instead, it is predominately micro, which is to say it has triggered more company-specific/industry-specific trading responses.
To that end, stocks like Rivian (RIVN), Lyft (LYFT), Twilio (TWLO), Toast (TOST), Akamai Technologies (AKAM), Upstart Holdings (UPST), and Doximity (DOCS) have generated their own kind of trading buzz following their earnings results. Some of that buzz is stinging badly for some of those stocks while some of that buzz has cast a favorable spotlight on other stocks.
It is a buzz, then, that has cut both ways, which has been a bit of a limiting factor.
Separately, Penn Entertainment (PENN) and Walt Disney’s (DIS) ESPN have created a buzz with the news that Penn has entered into an exclusive U.S. online sports betting agreement with ESPN, Inc. and ESPN Enterprises. Shares of PENN are up nearly 20% on the news. Walt Disney, by the way, reports its quarterly results after today’s close.
In overnight action, China reported a 0.3% year-over-year decline in CPI for July that was the first deflationary reading since February 2021. That should stir speculation about new stimulus measures being adopted in China while at the same time feeding into worries about China’s economic struggles.
On Thursday, the July Consumer Price Index will be released before the start of trading and it, too, will cause a buzz because of the implications it will hold for the Fed’s thinking on its next monetary policy step.
Originally Posted August 9, 2023 – Market is buzzing
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