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Oversold Bounce in US Equities Fails to Hold


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

The Turkish central bank announced today that it would hold an unexpected meeting of its monetary policy committee tomorrow. The meeting is being conducted to shore up the decline in the lira, and will probably include a significant increase in the bank's policy rate and various capital controls to prevent money from fleeing the country. In an official statement, the central bank said that it plans to "discuss recent developments and take the necessary policy measures for price stability."

The surprise announcement by the Turkish central bank pushed up pre-market equity index futures after the 3% drop in the prior two sessions. However, the S&P 500 (INDEXSP:.INX) experienced weakness shortly after the opening minutes, pushing the index's price down to critical 1,775 support. But the weakness turned out to be short-lived as equities recovered in the afternoon to post an increase for the day only to give back a large portion of those gains in the closing minutes. The small-cap Russell 2000 (INDEXRUSSELL:RUT) substantially lagged the larger-cap indices.

December 2013 new-home sales declined to a seasonally adjusted annual rate of 414,000 from 445,000 in the month prior (the prior month was revised down from 464,000). The economist estimate had been for a 1.9% month-over-month decline to 455,000. The likely reason for the substantial miss is the extreme cold weather that swept the country in that month.

Caterpillar (NYSE:CAT) reported earnings in the pre-market, beating expectations solidly. The main highlight was the company's announcement that it plans to purchase an additional $10 billion in common stock after its existing $7.5 billion plan wraps up in the coming quarter. Forward guidance for 2014 revenues and earnings were roughly in line with analyst expectations.

Tomorrow's Financial Outlook

Tomorrow morning, December 2013 US durable goods orders will be released. Economists are estimating that orders rose 1.8% month-over-month, up from a 3.4% gain in the month prior. Durable goods orders ex-transportation are estimated to rise 0.6%. Capital goods orders, which play an important part in determining GDP, are estimated to rise 0.3% during the month. The other economic data points to note are the November 2013 S&P/Case Shiller home price index and the January Conference Board consumer confidence index.

The Reserve Bank of India will make its monthly monetary policy decision tomorrow morning. Market participants are not expecting a major change in the central bank's stance. The advance estimate of 4Q UK GDP is also due out.

It will be a very busy day for earnings in the US tomorrow. Twenty-three companies are scheduled to report. Notable names include Comcast (NASDAQ:CMCSA), Ford (NYSE:F), Pfizer (NYSE:PFE), DuPont (NYSE:DD), AK Steel (NYSE:AKS), AT&T (NYSE:T), Electronic Arts (NASDAQ:EA), Yahoo (NASDAQ:YHOO), and VMware (NASDAQ:VMW).

Twitter: @Minyanville

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