It was a pretty quiet day following the Dow Jones Industrial Average making new highs. The ADP private payrolls report in the morning fell to a monthly rate of 198,000 from last month's upward revision of 215,000. This was better than the economist estimate, which called for a gain of 170,000. The prior report had previously risen 192,000. The other economic datapoint for the day was January factory orders, which fell 2.0% versus an estimated 2.2% fall. Markets continued to probe the upside in the morning session before hovering around the unchanged to slightly up level throughout the day.
In the afternoon, the Fed's Beige Book survey of its 12 regional districts showed that the economy continued to grow at a moderate pace in February as auto sales showed strong growth and labor markets continued to show modest gains. However, in conjunction with higher health care and income taxes, consumer spending showed weakness.
Financials was the leading sector while defensive sectors like utilities, consumer staples, and telecom all lagged.
Commodities were soft as the euro fell and the first estimate of European 4Q GDP dropped 0.9% year-over-year, inline with expectations.
Tomorrow's Financial Outlook
Overnight, the Bank of Japan will issue its monthly rate decision. Since the new regime will not take over until mid-month, it is unlikely that the BoJ will make any groundbreaking statements. However, in its last decision, committee members had disagreed over the maturity of current bond purchases.
Also on the central bank radar are the Bank of England and the European Central Bank. It is also unlikely that either will make any great easing pushes. While European markets and the euro have turned lower recently, this will not push policymakers into action just yet.
In the morning, we have January trade balance and weekly jobless claims released in the US. For weekly jobless claims, economists forecast a weekly rate of 355,000, the current 4-week moving average of claims. January's trade balance is expected to widen to -$43 billion from -$38.5 billion in December. Lastly, at 4:30 p.m. ET, the Federal Reserve will release its latest round of bank stress tests.
Tomorrow is the busiest day of the week on the earnings front with Smithfield Foods
(ZQK), H&R Block
(KR), and Nationstar Mortgage
(NSM) all reporting.
No positions in stocks mentioned.
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