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US Stocks Work Off Short-Term Oversold Conditions

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

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Japanese equities were pummeled following yesterday's sharp sell-off in the US. The Japanese Nikkei (INDEXNIKKEI:NI225) lost 4.18% and the Japanese TSE Mothers Index (INDEXTYO:MOS) lost 9.95%. The two are down 14.01% and 17.63% for the year, respectively. Japanese Economic Minister Amari lamented last night that US stocks are having an excessive reaction to Fed tapering and that Japanese equities do not need to act similarly.

The Reserve Bank of Australia kept rates on hold last night as expected. However, for the first time in more than a year, it did not note an excessively high level in the Aussie dollar and stated that the prudent course moving forward would be one of rate stability. The Aussie dollar rose more than 2% vs. the US dollar and Japanese yen.

US equities bounced back today after the extreme sell-off yesterday. At its intraday high, the S&P 500 (INDEXSP:.INX) retraced nearly 50% of Monday's losses. Health care and consumer staples stocks led today's bounce, though many traders were not trusting the rally. The equity put/call ratio on the CBOE was 180% to open the day, an extremely high reading.

Due to the projected amount of snowfall in the Northeast, natural gas futures jumped again today. Natural gas futures rose 9.61% in today's trading after falling 10.25% in the prior two sessions.

Microsoft (NASDAQ:MSFT) officially announced that Satya Nadella, its head of Cloud and Enterprise group, would take over as CEO of the company. Additionally, founder Bill Gates would step down as chairman and assume a new role on the board as a technical advisor.

Tomorrow's Financial Outlook

The January ADP private payrolls report will be released tomorrow morning. Investors will be paying close attention to this result as it should give a very good sense of whether or not Friday's official government payrolls report will be worse or better than expected. Economists estimate that payrolls will rise 185,000 during the month, down from 238,000 in the month prior. Also due out tomorrow morning is the national ISM services index, which is expected to rise to 53.7 in January from 53.0 in the month prior.

There will be two services PMI releases in Europe tomorrow as well. The final estimate of eurozone services PMI and the UK January services PMI are scheduled to be reported. December 2013 eurozone retail sales are also scheduled to be reported.

Thirty-four major US companies are scheduled to report earnings tomorrow. Notable reports include Merck (NYSE:MRK), Ralph Lauren (NYSE:RL), Walt Disney (NYSE:DIS), Green Mountain Coffee Roasters (NASDAQ:GMCR), Pandora (NASDAQ:P), Twitter (NYSE:TWTR), and Marathon Oil (NYSE:MRO).

Twitter: @Minyanville

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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