US Equities Continue Yesterday's Rally
Today's financial recap and tomorrow's financial outlook.
The World Bank upgraded its growth forecasts for 2014 this morning. It now sees global growth at 3.2% year-to-year from its estimate of 3.0% in June of last year. The World Bank warned that emerging market economies could see capital flows drop by 80% if developed markets' central banks moved too quickly with regards to removing monetary stimulus. If the removal caused rapid interest rate adjustments, countries with large current account deficits or high local debt levels would be most vulnerable to slowdowns. Its developing countries forecast was lowered to 5.3% from 5.6% in June, the EU was raised to 1.1% from 0.9%, and China was cut to 7.7% from 8%.
US equities continued their rally from yesterday. The S&P 500 (INDEXSP:.INX) and Russell 2000 (INDEXRUSSELL:RUT) broke to new record highs. The former rose 0.52%. The S&P was led by strong performances from telecom, tech, and financial stocks. Financials were buoyed by strong fourth-quarter results from Bank of America (NYSE:BAC). Energy-, health care-, and utility-sector stocks all declined.
December US producer prices rose 1.2% from a year ago, breaking their two-year trend of falling prices. The economist estimate had been for a 1.1% increase, up from 0.8% in the month prior. The New York regional manufacturing survey rose to an index reading of 12.51 in January, up significantly from 2.22 in the month prior. The survey showed strong gains in new orders, employment, and unfilled orders, all of which indicate strong activity in the new year.
Crude oil futures rose 1.68% after weekly inventories saw a surprise draw of 7.7 million barrels vs. an estimated draw of 673,000, according to the DoE. Last night's API inventories saw a draw of 4.14 million barrels, which caused some positive momentum in overnight trading.
Riverbed (NASDAQ:RVBD) rejected the $3.08 billion acquisition offer from Elliott Management that would have amounted to $19 per share. Riverbed saw the offer as undervaluing the company and not in the best interest of the shareholders. The stock added another 1% in today's trading, closing at $20.25.
The US will release the December 2013 consumer price index tomorrow morning. Economists estimate that prices rose 1.5% from a year ago after rising 1.2% in the month prior. Also scheduled for the morning is November 2013 TIC flows and the Philadelphia regional manufacturing survey. Lastly, the NAHB survey of builder and real estate agent sentiment for January will be released in the late morning.
December 2013 eurozone consumer price inflation will be released tomorrow morning before the US markets open. The final estimate of inflation is expected to remain unchanged at 1.8%. Also on the schedule is Australia's employment change and Japanese machine orders.
Fourth-quarter earnings reports will pick up tomorrow. Notable companies scheduled to report are Charles Schwab (NYSE:SCHW), BB&T (NYSE:BBT), BlackRock (NYSE:BLK), Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), Capital One (NYSE:COF), American Express (NYSE:AXP), Intel (NASDAQ:INTC), and PNC Financial (NYSE:PNC).
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