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Less Dovish FOMC Minutes Turn Stocks Negative


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

US economic data was better this morning, leading to an early turnaround in US equities. The private payrolls report from the ADP Institute showed a gain of 215,000 jobs, higher than the highest economist estimate of a gain of 210,000 jobs. The average estimate was for a gain of 140,000. Planned firings as reported by Challenger Job Cuts showed an annual decrease of 22.1% in December from last year to 32,556. Leading the way in firings was financials while new hirings also declined to 16,266 in December from 28,526 in November.

In global economic news, China and Germany saw better economic data. China's non-manufacturing PMI index rose to 56.1 from last month's 55.6. German unemployment remained unchanged at 6.9% from last month, but the number of people seeking unemployment benefits declined to 3,000 from 5,000, which was below the 10,000 estimate.

Though US equities recovered throughout the day to a slightly positive number, the afternoon release of the FOMC's minutes from its December meeting made stocks turn quickly negative. The minutes showed the Fed to be less dovish than it had been previously, causing all asset classes to fall. Notably, precious metals, stocks, and bonds all fell together as the dollar rose, forecasting less inflation in the future.

Car sales were a bit lighter than expected, with domestic sales falling to a 11.97 million vehicles SAAR (seasonally adjusted annual rate) from a 12.01 million SAAR. Notable misses was Nissan light vehicle sales falling 1.6% in December versus an estimated gain of 2.7%.

Tomorrow's Financial Outlook

Tomorrow morning the Bureau of Labor Statistics will release the monthly nonfarm payroll reports. After today's better-than-expected ADP report, Wall Street economists are expecting a monthly gain of 153,000 jobs, up from 150,000 earlier in the week. Last month, nonfarm payrolls rose by 146,000. Private payrolls estimates were raised to 150,000 from 135,000 earlier in the week. It is more likely now that this jobs report may beat to the upside given today's ADP report.

After the jobs report, the ISM's non-manufacturing index and factory orders from December will be released. Both are expected to decline slightly in December from November.

Globally, capping off a string of economic data releases, China will release the HSBC Flash Services PMI. Last month, the index fell to 52.1 from 53.5 the month prior. In Europe, the UK and eurozone will release the final estimate of services PMI data. No large change is expected.

In earnings, Mosaic (NYSE:MOS) and Finish Line (NASDAQ:FINL) will report.

Twitter: @Minyanville

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