It has become cliche almost to say the stock market had a great week last week, but the numbers don't lie. The S&P 500 gained 2.1% and is now up 15.4% year-to-date in what has become a collection of great weeks.
This week has a chance to be another great week. Then again, it has a chance to be a bad week, too. You just don't know what you're going to get until you get it, but there will be a lot to get this week between economic data, monetary policy, trade talks, Brexit discussions, geopolitics, and earnings news.
Currently, the S&P futures are down five points and are trading 0.2% below fair value. There is some news to account for the slightly negative bias, but in general we would ascribe the sluggishness mostly to a wait-and-see mentality.
What are some of the lead items on this week's agenda?
There is the Consumer Price Index report, the release of the FOMC Minutes, an ECB meeting, escalating military conflict in Libya, which is an oil-producing state, ongoing trade talks between the U.S. and China, the search for an acceptable Brexit plan in the UK, a House Financial Services Committee hearing involving the CEOs of the nation's largest banks, and the first quarter earnings reports from JPMorgan Chase (JPM) and Wells Fargo (WFC) on Friday, which will get the first quarter earnings reporting season rolling.
Most of these happenings will occur in the middle to latter half of the week.
The occurrences today that are acting as a drag on the futures market include a weaker-than-expected trade balance report for February out of Germany, which featured a decline in imports and exports, a series of downgrades on some widely-held stocks, and the news from Boeing (BA) that it is temporarily cutting the 737 MAX production rate from 52 airplanes per month to 42 as it focuses its efforts on completing the software fix that will help get the 737 MAX planes flying again.
Shares of BA are trading 16 points, or 4.2%, lower in pre-market action. That is accounting for most of the drag on the Dow Jones Industrial Average futures, which are down 100 points and trading 0.5% below fair value. The Nasdaq 100 futures are down 18 points and are trading 0.3% below fair value.
A Bank of America/Merrill Lynch downgrade of Boeing to Neutral from Buy has added to the selling pressure.
Other ratings changes weighing on matters include the following:
- General Electric (GE) was downgraded to Underweight from Neutral at JPMorgan Chase
- Micron (MU) was downgraded to Market perform from Outperform at Cowen
- Southwest Air (LUV) was downgraded to Market Perform from Outperform at Raymond James
- Starbucks (SBUX) was downgraded to Neutral from Buy at UBS
- Clorox (CLX) was downgraded to Underweight from Neutral at JPMorgan Chase
- Harley-Davidson (HOG) was downgraded to Market Perform from outperform at Wells Fargo
To be fair, Dow component Procter & Gamble (PG) was upgraded to Outperform from Market Perform at Wells Fargo, yet that move has been overshadowed in the early going by the aforementioned downgrades.