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US Markets Indecisive Ahead of ECB Meeting


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

News surfaced this morning that European officials were in discussions about pushing out the maturity of loans made to Greece by another 20 years, making the loans due in 50 years. Additionally, the rate on the loans would be reduced by 50bps to 1.5%, and Greece could be eligible to receive an additional aid package totalling about 13-15 billion euros in May or June as the country may run short on cash at that time.

US markets couldn't decide if they wanted to rally or sell off today. Initially, following slightly worse than expected ADP private payrolls, equity futures sold off, touching Monday's low. However, once equity markets opened for trading, most of the losses had been recovered. The ISM services index, which was released at 10:00 a.m. EST, was slightly better than expected at 54.0 vs. 53.7 estimates. Because the index was better, however, concerns were raised that Monday's poor manufacturing data may not, in fact, have been due to the weather. The S&P 500 (INDEXSP:.INX) breached Monday's low shortly after the report before rallying until the market close to finish down slightly.

Natural gas futures continued to trade erratically due to the extreme weather in the Northeast. The CME announced last night that it was raising margins on the futures for speculators by 9.9%. Initially, the market did not appear to be fazed by the margin increase, rallying more than 4%. However, natural gas reversed and ended up settling down 5.95% for the session.

US Treasuries continued their sell-off for the second straight day. The 10-year yield fell by four basis points to 2.67% after reaching a low of 2.57% on Monday.

In its earnings report after the close, Twitter (NYSE:TWTR) beat on the current quarter's EPS and revenues, and guided up strongly for the coming quarter and year. However, the stock was pummeled in post market trading, losing more than 15%.

Tomorrow's Financial Outlook

Tomorrow is a light day in terms of economic reports as markets prepare for Friday's official government payrolls data. Weekly initial jobless claims are scheduled to be reported in the morning in addition to December 2013's trade balance and preliminary fourth-quarter nonfarm productivity. In November of last year, petroleum imports fell to the lowest level since 2009.

The big market movements will come via the ECB, which will make its rate decision at 7:45 a.m. EST tomorrow. Many market participants are expecting the ECB to be very dovish in its outlook due to low inflation and tightening money-market conditions. Additionally, a number of news reports have indicated that the ECB is seriously considering not sterilizing its holdings of sovereign bonds to increase the amount of liquidity in Europe. The Bank of England will also release its rate decision tomorrow morning.

Forty-eight major US companies will report earnings tomorrow, making it the busiest day of the week. Notable reports include General Motors (NYSE:GM), Kellogg (NYSE:K), Lions Gate (NYSE:LGF), LinkedIn (NYSE:LNKD), AOL (NYSE:AOL), News Corp (NASDAQ:NWSA), Dunkin Brands (NASDAQ:DNKN), and Nu Skin Enterprises (NYSE:NUS).

Twitter: @Minyanville

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