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Investors Unfazed by Weak Chinese Manufacturing Data


End of Day Roundup 02/20: Today's financial recap and tomorrow's financial outlook.

Manufacturing growth in the eurozone and China was generally weaker according to preliminary purchasing manager indices. The China HSBC/Markit flash manufacturing PMI fell to 48.3 in February from 49.5 in the month prior, below the 49.5 expected. Due to the Chinese Lunar New Year holiday, it is probable that factory shutdowns contributed to this seasonal drop in activity. Advance estimates for February eurozone manufacturing PMI fell to 53.0 from 54.0 in the month prior, and below the 54.0 that was expected. Japanese and Chinese equities struggled, though European indices mostly closed around flat.

US stock futures traded down in the pre-market following the weaker data out of China. Investors had questioned the poor data last month, which sparked a rout in emerging market equities but has yet to have the same effect this month. Following a stronger preliminary manufacturing report for February, US stocks rocketed back and ended up recovering all of yesterday's losses and then some. The S&P 500 (INDEXSP:.INX) closed up 0.60% for today's session.

Tech stocks were helped by a strong intraday reversal in social media giant Facebook (NASDAQ:FB). The stock opened down 5% after its acquisition of messaging service WhatsApp for $16 billion and preceded to make new all-time highs late in the day.

The US consumer price index rose 1.6% from a year ago, in line with economists estimates. The Markit preliminary reading for February manufacturing jumped sharply, up to 56.7 from 53.7 in January and well above the 53.6 that was expected. The sharp jump likely caused investors to question some of the weak data we've received lately and whether or not it is merely a soft patch and not an emerging trend.

Wal-Mart (NYSE:WMT) reported fourth quarter earnings before the market opened. The consumer giant missed many of its benchmarks for revenues and comparable sales. The company also guided below analyst estimates for EPS and sales for the upcoming quarter and the full year. Lastly, the company saw traffic decline 1.7% year-over-year and stated that it continues to see economic factors weighing on its outlook. These factors include government benefits, higher taxes, and higher group health-care costs.

Tomorrow's Financial Outlook

Tomorrow is monthly options expiration day for single stocks, which should cause some indices to gravitate toward round numbers with large open interest. The sole economic report scheduled for tomorrow is January existing home sales, which makes up about 90% of the home-sales market. Economists estimate that sales will fall 4.1% in the month to a seasonally adjusted annual rate of 4.67 million. Keep in mind that January housing starts showed a sizable drop and the extreme weather during the month should make sales prone to a downside miss.

The minutes of the Bank of Japan's January monetary policy meeting will be released overnight. Also scheduled to be released are UK retail sales, public budget, Canadian retail sales, and consumer price index.

Because tomorrow is Friday, there will not be many earnings releases. The two reports scheduled will come from Charter Communications (NASDAQ:CHTR) and Dish Network (NASDQ:DISH).

Twitter: @Minyanville

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