It was a weak day yesterday for the stock market as bond yields, oil prices, and the strength of Hurricane Milton all rose. Things are looking a little better this morning with some Pavlovian buy-the-dip interest coming into play.<\/p>\n\n\n\n
Currently, the S&P 500 futures are up 20 points and are trading 0.4% above fair value, the Nasdaq 100 futures are up 71 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 46 points and are trading 0.1% above fair value.<\/p>\n\n\n\n
A 1.7% pre-market gain in NVIDIA (NVDA)<\/strong> is helping to boost things. Bloomberg<\/em> reports that Hon Hai Precision is aiming to increase capacity to meet demand for artificial intelligence products.<\/p>\n\n\n\n Gain in other mega-cap stocks are an additional underpinning factor for the equity futures trade, although Microsoft (MSFT)<\/strong> is lagging, trading flat on news of an Oppenheimer downgrade to Perform from Outperform that was tied to concerns about FY25 estimates being too high.<\/p>\n\n\n\n A prevailing question today is, will the buy-the-dip inclination succeed (again) or will there be a tonal shift where participants sell into strength? The answer may have a lot to do with market rates.<\/p>\n\n\n\n The 10-yr note yield is pushing higher, currently up one basis point to 4.04%, while the 2-yr note yield is down two basis points to 3.98% but up from an overnight low of 3.94%. There will be a $58 billion 3-yr note auction today with results announced at 1:00 p.m. ET.<\/p>\n\n\n\n The move in market rates occurred in front of the release of the August Trade Balance Report, which itself was greeted with a muted response.<\/p>\n\n\n\n The trade deficit narrowed to $70.4 billion in August (Briefing.com consensus -$71.3 billion) from a downwardly revised $78.9 billion (from -$78.8 billion) in July. The improvement was the result of exports being $5.3 billion more than July exports and imports being $3.2 billion less than July imports.<\/p>\n\n\n\n The key takeaway from the report is that the net exports component for August will be a positive input for Q3 GDP forecasts.<\/p>\n\n\n\n The update from China’s National Development and Reform Commission (NDRC) was not positive for Hong Kong’s Hang Seng Index. It plunged 9.4% on Tuesday after the NDRC commented on the implementation of prior stimulus, but did not announce any new stimulus measures. China’s Shanghai Composite nonetheless gained another 4.6% on the return from the Golden Week holiday but finished well off its high (+10.1%) for the session.<\/p>\n\n\n\n Oil prices are coming down from recent highs. WTI crude futures are off 1.8% to $75.73\/bbl and Brent crude futures are off 1.8% to $79.47\/bbl. Hurricane Milton’s strength has been tempered to Category 4 from yesterday’s Category 5 in open water. Milton is anticipated to make landfall on Florida’s west-central coast sometime Wednesday evening or Thursday morning.<\/p>\n\n\n\n —<\/p>\n\n\n\n