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Quieting down after big rebound move

We draw this to your attention because, while there is a lot of news to digest, market participants will probably key off this understanding: since Monday's lows, the Russell 2000 is up 6.0%, the Nasdaq Composite is up 3.2%, the Dow Jones Industrial Average is up 3.1%, and the S&P 500 is up 3.0%.

There has been a lot of earnings news since yesterday's close; the ECB released a new policy statement; GOP Congressman Kevin Brady said there is no way Republicans will support passing the $1.2 trillion bipartisan infrastructure bill if there is any indication it is going to be linked to the $3.5 trillion budget reconciliation bill; there is lots of chatter about mask mandates possibly returning at the local level to help fend off the Delta variant; and the weekly initial jobless claims report was released.

We draw this to your attention because, while there is a lot of news to digest, market participants will probably key off this understanding: since Monday's lows, the Russell 2000 is up 6.0%, the Nasdaq Composite is up 3.2%, the Dow Jones Industrial Average is up 3.1%, and the S&P 500 is up 3.0%.

Those are significant moves in a short period of time, so it isn't a stretch to think the market may take a breather, particularly as it sorts through all of the other developments noted above.

It's an easy sort when it comes to the earnings results. The vast majority were better than expected. That doesn't mean the reactions to the reports were all positive, yet it does fit with the market's understanding that most companies are surpassing earnings expectations that were already very high.

Companies like AT&T (T), American Airlines (AAL), Biogen (BIIB), Blackstone (BX), Crocs (CROX), CSX Corp (CSX), Danaher (DHR), Dow (DOW), DR Horton (DHI), Domino's Pizza (DPZ), Fifth Third (FITB), Nucor (NUE), Pool (POOL), Union Pacific (UNP), Texas Instruments (TXN), and Whirlpool (WHR) were on the list of positive earnings surprises.

In other words, the good earnings news cut across industry groups and sectors.

The fact notwithstanding, the futures market this morning is mixed. Currently, the S&P 500 futures are down three points and are trading 0.1% below fair value, the Nasdaq 100 futures are up ten points and are trading  just above fair value, and the Dow Jones Industrial Average futures are down 54 points and are trading 0.1% below fair value.

The indications had been slightly more positive a short time ago, but a disappointing initial claims report tempered what was already a fairly subdued futures market.

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