If one needed any evidence that the buy-the-dip trade has not been kicked to the curb, yesterday’s trade was more than sufficient. The S&P 500 scored a 0.97% gain, which got it back basically to where it started the week after suffering a 0.96% loss on Monday.
Understandably, then, the equity futures market looks a bit flummoxed about what the next turn will be.
The S&P 500 futures are down three points and are trading fractionally below fair value, the Nasdaq 100 futures are down 34 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 29 points and are trading fractionally below fair value.
The lack of conviction can be pinned on several influences:
- Waiting to see what today’s market action brings after the seesaw trading on Monday and Tuesday
- Waiting to see how Israel strikes back at Iran
- Waiting to see what kind of strike Hurricane Milton (currently Category 5) makes on Florida’s west-central coast tonight or early Thursday
- Waiting to see the results of the $39 billion 10-yr note auction at 1:00 p.m. ET
- Waiting to see what the FOMC Minutes for the September 17-18 meeting convey when they are released at 2:00 p.m. ET
- Waiting to see what the September CPI report and weekly initial claims data will look like when they are released before Thursday’s open
There is also some mixed action in the mega-cap space that is acting as a restraint. NVIDIA (NVDA) continues to run on AI momentum, up another 0.9%, which leaves it up nearly 15% since October 1. Alphabet (GOOG), on the other hand, is down 0.4% on reports that the Department of Justice is considering a breakup of Google.
Dow component Boeing (BA) is down 1.6%. The company said it has withdrawn its contract offer for machinists and that further negotiations don’t make sense at this point. Shortly before yesterday’s close, S&P said it had placed its ratings on Boeing on CreditWatch with negative implications.
There was a negative leaning today in China’s Shanghai Composite. It dropped 6.6% in a selloff from a short-term overbought posture and amid investor uncertainty about the prospect of more stimulus. China’s Ministry of Finance said, however, that it will hold a briefing on Saturday, October 12, to discuss fiscal policy and economic development.
Elsewhere, bonds are subdued, oil prices are subdued, and the U.S. Dollar Index is subdued as participants across the capital markets are waiting to see what comes next.
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Originally Posted October 9, 2024 – Waiting to see
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