The equity futures market is under some selling pressure to begin the week. Currently, the S&P 500 futures are down 14 points and are trading 0.3% below fair value, the Nasdaq 100 futures are down 82 points and are trading 0.4% below fair value, and the Dow Jones Industrial Average futures are down 48 points and are trading 0.2% below fair value.
The weaker (but not weak) disposition is flowing from a posture of strength in the major indices that has invited some selling interest after some big gains.
A bump in Treasury yields, geopolitical angst, and election uncertainty are garnering some attribution as proximate causes for the early weakness. Another component, arguably, is the recognition in sentiment readings that bullishness among fund managers is high and cash levels are relatively low, which is the right mix for contrarian-minded selling interest.
The 2-yr note yield is up four basis points to 3.99% and the 10-yr note yield is up six basis points to 4.13%.
No matter how one looks at things this morning, the overarching point is that there still isn’t a rush for the exits.
Losses at the open will be on the modest side of things, likely because there are enough participants who recognize that this bull market has feasted on buy-the-dip opportunities. Accordingly, there is a bit of a wait-and-see mentality that is keeping selling efforts in check, as participants wait to see if that buy-the-dip approach wins out again.
There is also a bit of wait-and-see thinking in front of a busy week of earnings reporting that will include reports from more than 100 S&P 500 companies.
That will include Dow component Boeing (BA), which reports before Wednesday’s open. The aircraft manufacturer is in the news today, however, after the IAM and Boeing negotiated a resolution contract that will face a ratification vote on Wednesday.
Boeing is sharing some of the corporate spotlight with Cigna (CI) and Humana (HUM), which are getting engaged again in merger talks, according to Bloomberg, and Walt Disney (DIS), which named James P. Gorman as Chairman of the Board, effective January 2, 2025, and said it plans to announce Disney’s next CEO in early 2026.
This news follows alongside macro developments that include Israel taking aim at Hezbollah’s financial arm in Lebanon, and the People’s Bank of China cutting its 1-yr and 5-yr loan prime rates by 25 basis points to 3.10% and 3.60%, respectively. Those cuts were larger than the 20 basis points expected by the market and at the upper end of Governor Pan’s view that they would be on the order of 20-25 basis points.
—
Originally Posted October 21, 2024 – Weaker but not weak
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Briefing.com and is being posted with its permission. The views expressed in this material are solely those of the author and/or Briefing.com and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.