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US Stocks Fail to Close Positive for Fifth Straight Day


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

The two major central banks in Europe kept their policies on hold this morning. The Bank of England left its benchmark interest rate and asset-purchase program unchanged, as was expected by economists. The ECB also kept its benchmark interest rates unchanged. In his normally scheduled press conference, ECB President Mario Draghi noted that low inflation was likely to remain for a long time in the eurozone, and growth risks remained to the downside. This will necessitate low interest rates for an extended period.

The Japanese Nikkei (INDEXNIKKEI:NI225) continued its third straight day of losses, falling 1.5% overnight. The USDJPY has also turned down after reaching its highest point since May.

US stocks remained under pressure throughout the session, recording their fifth straight day of losses. Small-cap stocks did outperform large-cap stocks on a beta-adjusted basis, however. Equity breadth remained weak, with the amount of declining stocks outnumbering advancing by more than a 2:1 margin. All 10 basic sectors of the S&P 500 (INDEXSP:.INX) were negative, led by telecom for the third straight day. Industrial sector stocks were the best performers.

The second estimate of third-quarter GDP rose to an annualized rate of 3.6% from the advance estimate of 2.8% on an abnormal gain in inventories. Weekly jobless claims hit a two-month low, but the Labor Department cautioned that it had a hard time seasonally adjusting the data due to the holiday season.

Natural gas inventories fell by 162 billion cubic feet in the past week, more than the expected range of 141 to 147 billion cubic feet, according to the EIA.

The Wall Street Journal reported overnight that China Mobile (NYSE:CHL) had agreed to a deal allowing wireless 4G communications into the country. This was viewed as a preface to the Apple (NASDAQ:AAPL) iPhone being sold in China. Chinese analysts forecast that the deal will generate as much as 500 billion yuan (~$82 billion) in investments.

Tomorrow's Financial Outlook

The November nonfarm payrolls report will be released tomorrow morning before the market open. Economists estimate that payrolls grew by a net 185,000 in November. Following yesterday's ADP private payrolls that beat the economist estimate solidly, the consensus has been revised up from 181,000. The government's report of October personal spending is estimated to rise 0.2% from the prior month to 2.4% from a year ago. The last important release is the preliminary estimate of the December University of Michigan/Reuters consumer confidence index. Economists estimate that the index will rise to 76.0 from 75.1 last month.

Canada will also release its November employment change in the morning before the US market opens. Canada's unemployment rate is estimated to rise to 7.0% from 6.9% in the month prior. Other important global market-moving news includes monthly German factory orders and Japanese leading economic indicators.

The notable earnings reports for tomorrow will come from American Eagle Outfitters (NYSE:AEO), Big Lots (NYSE:BIG), and Scotiabank (TSE:BNS).

Twitter: @Minyanville

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