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Stock futures turn south on economic data

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Stock futures had been indicating a higher open, but have turned lower after the plethora of economic data was released at 08:30 AM EST.

Stock futures currently have the S&P futures (sp02m) down 2.2 points at 1,108, NASDAQ futures are off 2.5 points at 1,118.50 and Dow futures are lower by 32 points at 9,590.

Fair value for the S&P 500 today is $2.18. That price will not change during the session. HL Camp & Company has their computers set for program buying at $3.66 and set for selling at $-0.90. Fair value for the NASDAQ-100 today is $7.00. The fair value and buy/sell programs are based on the September futures as the current June futures will expire at next Friday's triple witching expiration. The S&P 500 September futures (sp02u) are trading unchanged at 1,021.20.

This morning's retail sales report showed a decline of -0.9% to $297 billion in May, which was worse than economist's forecast for a -0.1% decline and this is the number that the market didn't like. Auto sales plunged 2.5% to $69.9 billion. Excluding motor vehicles, total retail sales fell 0.4%. It's the first decline in ex-auto sales since September.

What looks to have spooked investors in pre-market trading is that consumer spending hasn't been a worry for policymakers. Consumer spending never faltered during the recession, thanks to low energy costs, healthy income growth, a timely tax cut and massive mortgage refinancing and home equity application.

But now, economists worry that most of those positive factors may be fading. Growth in wages and salaries - the most important source of income for most Americans - has slowed. This has had the consumer increasingly "cost conscious," where only a good deal can persuade them to buy.

In a separate report, the Labor Department said the producer price index fell 0.4% in May as energy costs fell 2.3%. Excluding the more volatile food and energy components, the core PPI was flat. Economists were looking for the PPI to rise just 0.1% and for the core rate to also rise just 0.1%. This morning's PPI numbers show that inflation remains tame and not a problem.

Jeff Bailey
Senior Market Technician
Option Investor

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