This week is certain to produce its share of trading drama, too.
Aside from the fact that over 130 S&P 500 companies will be reporting their June quarter results, participants will also be contending with the advance estimate for second quarter GDP, the ECB meeting, the Bank of England meeting, the FOMC meeting, month-end activity, and the release of the July employment report.
We expounded on several of these items, and their potential to move the market, in The Big Picture column this week.
Today, the market has been unmoved thus far by a spate of M&A activity that included a merger of equals between advertising firms Omnicom (OMC) and Publicis, an $8.6 bln acquisition of Elan (ELN) by Perrigo (PRGO), and a $2.9 bln cash offer by Hudson Bay Company to acquire Saks (SKS).
The S&P futures are down three points and are trading 0.2% below fair value, suggesting a slightly lower open for stocks.
A sizable 3.3% decline in Japan's Nikkei and a 1.7% drop in China's Shanghai Composite have created some early distractions. A stronger yen reportedly got the better of the Nikkei while credit and growth concerns have been the oft-cited reasons for the weakness in China.
Remarkably, the Nikkei has dropped 1070 points, or 7.3%, in the last three sessions. It's a move to keep a close eye on given all of the reports about hedge funds favoring a trade where they are short the yen and long the Nikkei to take advantage of Abenomics and the Bank of Japan's monetary policy largesse.
In a week when the Fed meets, though, the stock market has a unique way of compartmentalizing other matters until it gets a sense of policy direction from the Fed. Judging by the limited response in the futures market, that disposition may be taking root gain today.
--Patrick J. O'Hare, Briefing.com