US equities rose in overnight trading and continued to rally following the Congressional testimony from Fed Chairwoman Janet Yellen. In her testimony, delivered to the House Financial Services Committee, she discussed the recent developments in financial markets and the current complexion of the Fed's monetary policy. Yellen stated that the FOMC is likely to continue on its current course of reducing asset purchases in measured steps over the coming year as long as incoming data was broadly consistent with the Fed's stated goals.
The S&P 500
(INDEXSP:.INX) rose 1.11% in today's trading led by strong gains from all of its 10 basic sectors. Emerging market equities and domestic small caps also posted strong gains. December 2013 wholesale inventories rose 0.3% month-over-month, short of the 0.5% expected. The slower rate of inventory growth should negatively affect fourth-quarter GDP. The second estimate of 4Q GDP will be reported on February 28.
The House of Representatives brought a "clean" debt limit bill to the floor today that would push out the debt ceiling for about 18 months. Additionally, the Affordable Care Act mandate for employers with 51-100 employees to provide health insurance for their workers was delayed until 2016.
(NYSE:BCS) announced this morning that it is cutting 12,000 jobs from its investment bank, or about 8.5% of its total workforce. The stock traded down as much as 5% in early trading, but recovered later in the session alongside strong performance from other financial stocks. The job cuts will be across all areas and levels of seniority.
Tomorrow's Financial Outlook
The only major noteworthy economic data report for tomorrow is the January Treasury budget statement. The budget is estimated to show a shortfall of $10 billion after a surplus of $2.9 billion in December of last year.
January eurozone industrial production is scheduled to be reported tomorrow in addition to China's January trade balance and the Bank of England's inflation report for the fourth quarter. ECB President Mario Draghi is scheduled to give the keynote address in Brussels for the 20th anniversary of the establishment of the European Monetary Institute.
Twenty-three major US companies are scheduled to report earnings tomorrow. Notable reports include Deere
(NASDAQ:CSCO), Applied Materials
(NASDAQ:Z), and Whole Foods Market
No positions in stocks mentioned.
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