Tomorrow is the July 4th holiday, yet the fireworks came early for the stock market on Friday. Last week closed with a bang to put an exclamation point on a terrific second quarter and first half of the year.
How good was the first half? The answer might be considered ruefully given one’s exposure, but the objective fact of the matter is that it was the best first half of a year for the Nasdaq since 1983!
Today, the equity futures market looks like a bit of a dud. There are no “oohs” and “aahs” with bomb’s bursting in air, only a dose of “meh” when looking at the futures market.
Currently, the S&P 500 futures are down three points and are trading 0.1% below fair value, the Nasdaq 100 futures are up 17 points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are down 67 points and are trading 0.2% below fair value.
Today will be an abbreviated trading session. The stock market closes at 1:00 p.m. ET and the Treasury market closes at 2:00 p.m. ET. Markets will be closed July 4.
It is fair to say that a lot of market participants are not participating today, choosing instead to stretch this holiday affair into a four-day weekend.
The thin conditions are partly why there isn’t much conviction ahead of the open. Other factors include a wait-and-see stance in front of the June ISM Manufacturing PMI release at 10:00 a.m. ET, simmering valuation concerns, and another bump in market rates. The 2-yr note yield is up four basis points to 4.92% and the 10-yr note yield is up two basis points to 3.84%.
Tesla (TSLA), however, isn’t being held back by any of that. It is up 5.6% in pre-market trading after announcing Q2 deliveries (466,140) that were better than expected. The pop in TSLA has been an influential source of support for the Nasdaq 100 futures.
Separately, the bank stocks are lending some support to the broader market as well. After the close on Friday, many announced capital return plans following the stress test results and have garnered some buying interest in pre-market action.
Morgan Stanley (MS) is a standout in this regard. It is up 1.2% after saying its Board agreed to increase the quarterly dividend to $0.85 per share from $0.775 and reauthorize a multi-year common equity share repurchase program of up to $20 billion.
Saudi Arabia, meanwhile, is reauthorizing its voluntary output reduction of one million barrels per day another month into August and Russia said its exports will be reduced by 500,000 barrels per day in August, according to Reuters. This news has WTI crude futures up 1.0% to $71.33 per barrel.
We’ll see if this lights a match under the energy stocks, but for the most part, nothing is igniting at the moment at the index level.
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Originally Posted July 3, 2023 – No fireworks ahead of the open
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