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Impending Yellen Confirmation Boosts US Stocks


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

The Chinese government released an official statement after the completion of the Third Plenum conference yesterday. Contrary to what had been released by the official Chinese news agency Xinhua yesterday, there was no explicit language about domestic fiscal or economic reforms. As a result, Chinese stocks sold off. The Shanghai Composite index (SHA:000001) closed down 1.83%. European stocks were also lower.

Because of the perceived negatives from the China news, US equities traded down overnight. S&P 500 (INDEXSP:.INX) futures reached a low of 1754 shortly before the market opened, only to rocket to new record highs at 1773.50 in the late morning. Rumors surfaced that Federal Reserve Chairwoman-elect's comments for tomorrow's Senate hearing would be released early. As a result, stocks shot to new highs and closed with authority. Yellen's testimony was released shortly after the market closed. The comments indicated that she would continue the status quo at the Fed.

Consumer discretionary and consumer staples stocks were the best performers today, leading the S&P with 1.15% gains each. Telecom stocks were the worst performers, falling 0.35%. The Treasury sold $24 billion of new 10-year notes at a high yield of 2.75%. The auction was met with strong demand.

Crude oil overcame yesterday's stumble to close up 0.91%. The EIA announced today that US crude oil output exceeded imports for the first time since 1995. Additionally, US net crude oil imports were at the lowest level since 1991 in the fiscal year 2013.

The US Department of Health and Human Services released new data about the number of people who had enrolled in the Affordable Care Act this afternoon. The HHS said that 106,185 people had signed up for the new health insurance plans, yet only 27,000 had used the federal website to sign up. The rest had used the websites of their respective states.

Tomorrow's Financial Outlook

Tomorrow morning the Labor Department will release jobless claims from the past week. Economists estimate that 330,000 claims were filed in the past week. In the prior week, 336,000 claims were filed, and the 4-week moving average of claims is 348,300. The US's September trade deficit is expected to widen slightly to -$39 billion from -$38.8 billion in the prior month.

Global economic data released overnight should play a major role in the overnight price action. Japan, France, and Germany will all release preliminary third-quarter GDP figures. Japan will also release industrial production and the UK will release retail sales figures.

Only eight major US companies will report tomorrow. Notable reports include Agilent (NYSE:A), Nordstrom (NYSE:JWN), Applied Materials (NASDAQ:AMAT), Kohl's (NYSE:KSS), Wal-Mart (NYSE:WMT), and Viacom (NASDAQ:VIAB).

Twitter: @Minyanville

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