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Market Recap: Showdown at the Small-Cap Corral


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

US equities struggled to remain unchanged or better today. In early trading, the S&P 500 (INDEXSP:.INX) traded down six points, but recovered into slightly positive territory shortly thereafter. Trading continued erratically throughout the rest of the afternoon and the S&P finished down 3.6 points. Equity breadth remained at a dismal 2.5:1 negative. The small-cap Russell 2000 (INDEXRUSSELL:RUT) continued its underperformance and was down 0.56%. European equity indices were all lower on the day; Italy and Spain were the worst performers, losing more than 1.5%.

JPMorgan (NYSE:JPM) finalized its settlement with federal and state governments over its sales of mortgage bonds from acquired subsidiaries Bear Stearns and Washington Mutual. The New York Attorney General commented in a news conference this afternoon that the bank would pay $2 billion in civil penalties as part of the $13 billion deal. Additionally, the settlement would not protect the bank nor its employees from criminal charges. Bank stocks were the best-performing sector in the S&P 500 now that the concerns over future regulatory charges are alleviated.

The Office of Economic Co-Operation and Development (OECD) lowered its global growth forecast for 2013 to 2.7% from its prior forecast of 3.1% in May. For 2014, the growth forecast was lowered to 3.6% from 4%. The OECD cited slowdowns in emerging-market economies, particularly India and Brazil. In addition, the OECD also pushed for the ECB to ease policy further and the US Federal Reserve to keep an accommodative stance on monetary policy.

Home Depot (NYSE:HD) reported earnings in the pre-market, solidly beating expectations. The company reported EPS of $0.95 vs. $0.90 expectations and revenues of $19.47 billion vs $19.18 billion expectations. In addition, the company raised its sales forecasts for the coming quarter and full year. However, management noted on the conference call that it foresees headwinds in the next quarter and the likelihood of margin pressure.

Tomorrow's Financial Outlook

Current Federal Reserve Chairman Ben Bernanke will give a speech at 7:00p.m. EST tonight to the Economists Club in Washington. It is possible that the speech may be a factor in tomorrow's trading.

US economic data should be a big market mover tomorrow. In the morning, the US will release October retail sales and consumer price indices. Consumer prices from a year ago are estimated to rise 1% after rising 1.2% in September. Retail sales are estimated to rise 0.1% from the prior month. Another market-moving event is the release of the minutes from the October FOMC meeting. Because some language over tightening financial conditions was removed from the statement, investors will be paying more attention than usual to the minutes.

Globally the only market-moving data comes from Japan. Japan will release its October trade balance and September all-industry activity index.

Notable US earnings reports tomorrow include Deere (NYSE:DE), Lowe's (NYSE:LOW), Staples (NASDAQ:SPLS), and ADT (NYSE:ADT). All are scheduled to report before the market opens.

Twitter: @Minyanville

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No positions in stocks mentioned.

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