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US Markets Recover Overnight Losses to Record Strong Gains


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

The preliminary estimate of Chinese manufacturing PMI came in below expectations for the second straight month. The survey of purchasing managers fell to an index level of 50.5 from last month's 50.8, below the estimate of 50.9. The Shanghai Composite (SHA:000001) fell 1.6%, and the Japanese Nikkei (INDEXNIKKEI:NI225) was down 1.62%.

European stock indices rallied strongly after European manufacturing data, specifically that of Germany, showed signs of continuing momentum. The December eurozone composite rose to 52.7 from last month's 51.6, well ahead of the 51.9 estimate. Last week, European stocks suffered sharp losses as investors began to price in slower economic activity. The Italian FTSEMIB (INDEXBIT:FTSEMIB) was the top-performing index, rising 2.34%.

S&P 500 (INDEXSP:.INX) futures recovered from sharp overnight losses to post strong 0.63% gains in today's session. Technology-, energy-, and industrial-sector stocks posted the strongest gains. November industrial production rose 1.1% from the prior month, well ahead of the 0.6% estimate. Capacity utilization also rose to the highest level since 2004. Equity breadth remained strong throughout the day, with advancing stocks outnumbering decliners by a 2.5:1 margin.

Natural gas suffered its first day of losses since December 2, after gaining 25% since early November. Brokers cited reduced gas demand and speculation that the weather would turn milder in the Northeast this week. Futures for January delivery fell 2% at the close of floor trading today.

Twitter (NYSE:TWTR) traded very erratically today. It was downgraded by Wells Fargo and Suntrust Robinson Humphrey overnight, both of which cited the stock's extended valuation, courtesy of its huge run over the past two weeks. Additionally, the unconfirmed chatter that activist investor Carl Icahn had taken a position in the stock was refuted by news reports. The stock lost 4% in today's trading.

Tomorrow's Financial Outlook

Tomorrow morning, the US will release the November consumer price index. Economists estimate that prices rose 0.1% from the prior month to a 1.3% annual rate. The other report scheduled for tomorrow morning will be the NAHB survey of builder and real estate agent sentiment. The survey is estimated to rise to an index reading of 55 from 54 in the prior month. The index peaked at 58 in August of this year.

Global market-moving data releases tomorrow will include new European Union car registrations, the advance estimate of November eurozone CPI, and the ZEW survey of economic sentiment among professional investors. Lastly, the UK will release consumer and retailer price indices.

Notable earnings reports tomorrow include Jabil Circuit (NYSE:JBL) and VeriFone Systems (NYSE:PAY).

Twitter: @Minyanville

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