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Alcoa Kicks Off Earnings Season With a Whimper


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

The ECB and Bank of England both made no changes to their benchmark interest rates earlier today, as had been expected. ECB President Mario Draghi said in his usual press conference following the meeting that he expects rates to stay low for an extended period and that growth risks remain on the downside. Lastly, he said that the ECB stood ready to act if money-market conditions tightened, or if the danger of deflation became imminent.

US equities opened the day with a sharp sell-off; the S&P 500 (INDEXSP:.INX) was down as much as 7.5 points. However, some buyers appeared later in the session, bringing the benchmark index back near unchanged for the day. Telecom-sector stocks were the worst performers for the second day in a row, mostly due to concerns that the major wireless vendors are about to enter a price war.

Weekly jobless claims fell to 330,000 in the prior week, slightly better than the 335,000 estimate. The 4-week moving average moved down to 349,000 after the prior week's 358,800. However, due to the recent holiday season, weekly claims figures remain volatile.

West Texas Intermediate crude oil futures fell to their lowest level in seven months this afternoon, breaking multi-year support. Global commodity indices will begin their annual rebalancing next Wednesday. Indices will need to sell $2.8 billion of crude futures and buy $2.7 billion of brent crude in this year's rebalancing.

Natural gas inventories fell by 157 billion cubic feet in the past week, according to the EIA. Analysts had been expecting a range of -154 to -159 bcf. Natural gas futures fell 4.3% at the close of floor trading. Most traders had been waiting to see how strong the inventory figure would be. Because it wasn't a blowout, many looked to exit positions.

Alcoa (NYSE:AA) unofficially got the fourth-quarter earnings season started today after the close. The company reported EPS of $0.04 vs. estimates of $0.06, but beat earnings solidly at $5.585 billion vs. estimates of $5.34 billion. The company wrote down $1.7 billion in goodwill, which hurt its bottom-line results, and it sees 2014 global aluminum demand growth at 7%. The stock traded down more than 3% in the post-market.

Tomorrow's Financial Outlook

Tomorrow morning, the Labor Department will release December 2013 nonfarm payrolls growth. Economists are expecting net growth of 197,000 payrolls in the month, and that the unemployment rate will remain unchanged at 7.0%. Because of the strong ADP private payrolls report yesterday, the market is well prepared for the nonfarm payrolls report to beat expectations.

Canada will also release its monthly employment change at the same time as the US. The UK will release manufacturing and industrial production data as well as construction output data for November 2013. Lastly, in the UK, NIESR will release its December 2013 GDP estimate.

There are no major earnings reports scheduled for tomorrow.

Twitter: @Minyanville

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No positions in stocks mentioned.

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