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Fourth Quarter GDP Contracts and Stocks Dive


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

It was a very busy day on the economic and earnings front in the US. In the morning, the ADP Research Institute released its private payrolls report from the month of January. Businesses added 192,000 jobs, up from December's lower revised report of 185,000 payrolls. Economists were forecasting a gain of 165,000. It is worth noting that the government's nonfarm payroll report showed a gain of 192,000 payrolls in December, so the ADP's new methodology has continued to show more relevance to the government reports.

The other major US data point was the GDP growth from the fourth quarter. US growth contracted at a 0.1% rate during the fourth quarter, tagged to the massive decrease in government spending from the third quarter. Government spending dropped 6.6% in the 4Q, which was highlighted by a 15% drop in federal spending and 22.2% drop in defense spending. This contributed to a negative 1.33% hit to GDP. Balancing out this large decline was an uptick in personal consumption to 2.2% from 1.6%.

Research In Motion (NASDAQ:RIMM) released its self-inspired game-changing new operating system today, the BlackBerry 10 and it's two new phones, one a keyboard and the other a touchscreen. RIM also changed its company name to BlackBerry, in keeping with its flagship brand. Even though the announcement was highly anticipated, the stock crumbled to finish down 12% on the day after trading 222 million shares.

The FOMC released its monthly rate decision and asset purchase targets, which were left unchanged as expected. There was little change in the Fed's statement. The committee noted that global economic strains had eased while economic activity in the prior months had paused due to weather and transitory issues. Regardless, stocks used this release to sell off sharply, the Russell 2000 (INDEXRUSSELL:RUT) notably underperforming.

Tomorrow's Financial Outlook

The torrent of US economic data that we saw today continues tomorrow. In the morning, the government will release planned layoffs and personal income and spending data from December. Both are expected to show small monthly gains. The weekly jobless claims are expected to rise from last week's multi-year low at 330,000 to 350,000. Lastly, the Chicago Business Barometer is expected to expand mildly from 50.0 to 50.5 in December.

Globally, Germany will release retail sales and employment data from the month of December. Both are expected to contract sharply.

Tomorrow will be another big day for earnings as Dow Chemical (NYSE:DOW), NASDAQ (NASDAQ:NDAQ), Under Armour (NYSE:UA), UPS (NYSE:UPS), Aetna (NYSE:AET), Mastercard (NYSE:MA), Time Warner Cable (NYSE:TWC), Eastman Chemical (NYSE:EMN), Blackstone (NYSE:BX), Cavium (NASDAQ:CAVM), and Viacom (NYSE:VIA).

Twitter: @Minyanville

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