Early Rally Snuffed Out by Prospect of Higher Taxes and Greece Worries
Today's financial recap and tomorrow's financial outlook.
After opening higher, equities faded and successfully filled the overnight gap from yesterday's close. However, negative breadth (number of declining stocks outnumbering advancing stocks) continued throughout the day. After a news briefing by President Obama discussing increased taxes for the wealthy as well as the German newspaper Handlesblatt reporting that it was not likely that European authorities would vote on the Greek aid tranche at next month's meeting as planned, stocks sold off sharply.
Treasuries did not rise in concert with the sharp sell-off in equities, finishing only slightly higher on the day. This was likely weighed down by continued weakness from the yen and a slightly better performance from the US dollar.
Early in the morning, UK jobless claims rose more than expected, climbing by 10,000 compared to economist estimates for this figure to be unchanged from the month prior. Also, eurozone industrial production fell by 2.5% from last month, worse than the -2% consensus estimate.
In the afternoon, the FOMC released its minutes from the past month's meeting. Of note, the committee discussed quantitative targets for future interest rate and QE policy, but it is unlikely that this change in policy would go into effect in the near future. In addition, the committee noted that the $45 billion in long-term purchases of Treasuries under Operation Twist should be extended into outright balance sheet expansion once the program was completed at the end of the year.
In earnings, Abercrombie & Fitch (NYSE:ANF) blew past all estimates for current quarter estimates and forward guidance on earnings, revenues, and same-store sales. Abercrombie & Fitch's stock rose nearly 35% at some points throughout the day, closing 34% higher.
Tomorrow's Financial Outlook
Tomorrow morning the US will release weekly jobless claims and consumer price index (read: inflation) data. Due to Hurricane Sandy and winter storms in the Northeast, it is likely that claims data will be distorted for a second straight week. In terms of inflation, a drastic increase in inflation could see a muted response due to the expectation of continued Fed monetary easing next month.
In Europe, the eurozone will report GDP and CPI figures from the prior month. GDP is expected to decline to -0.6% from -0.5% on an annual basis and CPI is expected to decline to 2.5% annually.
In earnings, Wal-Mart (WMT), Target (TGT), Dollar Tree (DLTR), Ross Stores (ROST), Gap (GPS), Sears Holdings (SHLD), Applied Materials (AMAT), Dell (DELL), Aruba Networks (ARUN), GameStop (GME), and Viacom (VIA) will report.
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter