There is plenty of good earnings news this morning to get the stock market going, but because the going hasn’t been tough at all this month, the stock market isn’t really going like one might think.<\/p>\n\n\n\n
Currently, the S&P 500 futures are up two points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 15 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are up 40 points and are trading 0.4% above fair value.<\/p>\n\n\n\n
The restraint is owed partly to a belief that the stock market seems ripe for a consolidation period after a huge move this month. The lackluster action yesterday — after more good earnings news — was a testament to that belief.<\/p>\n\n\n\n
Other hesitation factors include the continued curve-flattening action in the Treasury market, which is an anxious-minded trade involving the potential for a policy mistake, and the formulation of some new tax ideas to help pay for the Democrats’ social spending package. The 2-yr note yield is up three basis points to 0.48% while the 10-yr note yield is down four basis points to 1.58%.<\/p>\n\n\n\n
Briefly, a 15% minimum tax on companies reporting over $1 billion in profits to shareholders and a tax on unrealized capital gains for taxpayers with more than $100 million in annual income or more than $1 billion in assets for three consecutive years have been proposed as “pay fors” for the social spending package.<\/p>\n\n\n\n
It is unclear if the latter is even legal, yet it goes to show how Democrats are trying to get to a framework for a deal that has been a moving target in terms of its size and pay fors. On a related note, the leader of House progressives said yesterday that “dozens” of progressives aren’t going to vote for the bipartisan infrastructure bill if there is just a simple framework on the reconciliation bill.<\/p>\n\n\n\n
So, it’s still looking like three yards and a cloud of dust in terms of the Democrats working out an acceptable reconciliation bill.<\/p>\n\n\n\n
Meanwhile, Microsoft (MSFT)<\/strong> had the equivalent of a long, forward pass with its latest earnings report. It beat on earnings with total revenues up an impressive 22.0%, bolstered by Azure revenue growing 50% year-over-year. Shares of MSFT are 1.7%.<\/p>\n\n\n\n Alphabet (GOOG)<\/strong> also delivered with strong revenue and earnings growth, yet its stock is little changed in pre-market trading, seemingly hitting a wall of high expectations.<\/p>\n\n\n\n