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Index Futures Down Ahead of the Opening Bell

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Ahead of the opening bell to start a new week of trading, major U.S. index futures are down but not drastically so. Positive news reports during the day may be enough to swing markets into the green. But as for now, these news items are keeping trading sentiment murky:

General Motors (GM - Free Report)  is enduring its eighth day of a strike by the United Auto Workers’ (UAW) roughly 50K employees, and with inventories drawing down the pain gets more severe from here for the company; and Saudi Aramco is adjusting its prediction for when its sabotaged oil and gas lines knocked out production of more than 5 million barrels per day, now saying supply may take months — not weeks — to bring supply fully back on-line.

After three straight months of posting negative headlines on the Chicago Fed National Activity index, August came in at +0.1% this morning. This follows a downwardly revised -0.41% from July, where we saw Industrial, Manufacturing and Sales, Orders and Inventories reads all come in negative for the month.

For August, only two sub-headline segments came in below zero: Manufacturing Production and Durable Goods ex-Transportation both ushered in -0.4% reads on the month. Everything else in this regional production survey came in at positive levels. Modestly, we see this econ metric as good news.

It also follows recent regional production prints from the Philly Fed last week, as well as the Empire State survey. The Philadelphia-based index posted a better-than-expected headline, at around the mid-range for the year; the New York State read came in at single-digits, bouncing back from a negative headline the previous month, which was its lowest since January 2016.

With a second quarter-point interest rate cut in seven weeks, the Fed — and the U.S. economy overall — looks to march along without much fanfare, but also without much reason for trepidation. As the Eurozone attempts to scrape its collective economy back together again (with or without Britain, which is a whole other story) and the U.S. and China continue to extend pleasantries on the trade front, we feel a moderately optimistic outlook on the market may be in order.


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