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US Equities Have Worst Start to New Year Since 2005


Today's financial recap and tomorrow's financial outlook.

Japanese markets opened for the first time in a week, falling 2.35%. However, Nikkei (INDEXNIKKEI:NI225) futures had been down more than 3% prior to today's session, so the losses were theoretically not as bad as they had looked before today. The Shanghai Composite (SHA:000001) fell 1.8% due to declining services growth in China. Many investors have questioned how lasting the economic recovery has been in the country, which has caused stock prices to drop significantly of late.

US equities remained in negative territory for much of the day. The benchmark S&P 500 (INDEXSP:.INX) fell 0.25% led by declines in materials and consumer discretionary stocks. Gold futures flash crashed at 10:13 a.m. EST this morning, which triggered a "velocity logic" event, prompting the CME to momentarily halt trading in the contracts. The prices initially dropped 2.67% before quickly recovering, finishing the session almost unchanged.

The national ISM index of non-manufacturing activity fell to 53.0 in December 2013 from 53.9 in the month prior. Economists had estimated an increase to 54.7. The index's new orders, order backlog, and inventories components -- which are typically leading indicators -- were all disappointing. However, the employment component showed strong growth, which may foretell a positive nonfarm payrolls report on Friday.

FedEx (NYSE:FDX) issued $2 billion in new corporate debt today and accelerated its share-repurchase program by purchasing shares held directly by banks. FedEx is one of the first US corporations to issue new debt in 2014.

The Senate is scheduled to vote on Janet Yellen's nomination as Fed chair at about 5:30 p.m. EST this afternoon. It is widely expected for the vote to pass, despite Republican opposition.

Tomorrow's Financial Outlook

Tomorrow the only economic data release of note in the US will be the November 2013 trade balance. Economists expect the US trade deficit to narrow marginally to $40.0 billion from $40.6 billion in the month prior. The report will play a significant role in determining fourth-quarter GDP growth.

Globally, Germany will report its December 2013 employment change, and the eurozone will release its preliminary estimate of December 2013 consumer price growth. Economists expect Germany, the strongest of the European economies, to see the number of unemployed persons drop by 1,000, and the rate to remain unchanged at 6.9%.

Micron Tech (NASDAQ:MU) and Apollo Education Group (NASDAQ:APOL) are scheduled to report earnings tomorrow after the market close.

Twitter: @Minyanville

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