Investors got a sneak peek at Friday's official government jobs report with the ADP private payrolls report this morning. In February, private companies added a net 139,000 jobs according to the payrolls processor, and the prior month's figure was revised down to 127,000 from 175,000; economists had expected a net gain of 155,000 in February. The February national ISM services index showed a surprising drop to 51.6 after 54.0 in the month prior. The economists' estimate had been for 53.5. The most troubling part of the report was the employment component, which contracted after 25 straight months of expansion.
US equities digested yesterday's outsized gains in today's session, meandering sideways for much of the day. Volumes remained on the lighter side, with only 3.16 billion shares trading on the NYSE composite vs the 3.32 billion 15-day average. Energy-sector stocks were the worst performer in the S&P 500 (INDEXSP:.INX) thanks to a 2% decline in crude oil and a 3% drop in natural gas.
The Fed's Beige Book, an overview of economic activity in its 12 districts for the last six weeks, was released this afternoon. Business contacts in the survey saw the economy continuing to grow despite the harsh winter weather. Most of the districts in the Northeast and Midwest noted slowdowns in retail sales growth and manufacturing activity.
Tomorrow's Financial Outlook
The last piece of jobs data before Friday's government payrolls report, last week's jobless claims, is scheduled to be reported tomorrow morning. Economists estimate that claims will fall to 336,000 from 348,000 in the week prior, near the 338,300 four-week moving average. Also scheduled to be reported is January factory orders.
The main highlight tomorrow is the ECB's monthly rate decision. Due to softening inflation over the last six months, many market participants expect the ECB to act to ease money market conditions. Recent commentary has indicated that the central bank intends to cease its policy of sterilizing its Securities Markets Programme (SMP) bond holdings, which would add back about $240 billion in cash to the European financial system. Other potential avenues are long-term loans to European financial companies or a cut to one of the ECB's policy rates.
Tomorrow marks the busiest day of the week in terms of earnings reports. Notable companies scheduled to report includes Joy Global (NYSE:JOY), Costco (NASDAQ:COST), Staples (NASDAQ:SPLS), Ciena (NYSE:CIEN), H&R Block (NYSE:HRB), Finisar (NASDAQ:FNSR), Kroger (NYSE:KR), and The Fresh Market (NASDAQ:TFM).
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