First Government Shutdown in 17 Years Sends Stocks Rocketing Higher
Today's financial recap and tomorrow's financial outlook.
Overnight, Japan's Prime Minister Shinzo Abe stated that he would raise the sales tax to 8% from 5% over the coming year, as had been previously announced. In response to the increase in revenue, the government would increase infrastructure spending by $51 billion and give tax breaks to companies.
China's official manufacturing index showed little gain from the prior month and fell short of estimates. In Australia, the central bank kept policy unchanged as had been expected. The bank noted increased financial volatility, due to the changes in US monetary policy, and reiterated that keeping the Aussie dollar lower would help rebalance growth.
US equities opened the day up very strongly and recovered all of yesterday's sell-off. Tech-related stocks were the top performers, and capital also shifted into health care. Interest-rate-sensitive utility stocks were the worst performers today, though they did finish in positive territory. Real estate stocks also showed solid performances.
Gold and other precious metals had a very bad day. Gold was down 3% for most of the day; silver was down as much as 5%. Two possible reasons for the sell-off were foreigners selling US-dollar-based assets and investors selling gold in response to a marginally higher Japanese yen.
In the pre-market, pharmaceutical company Merck (NYSE:MRK) reported that it was laying off 8,500 workers. Combined with the 7,500 layoffs announced earlier this year, Merck is laying off 20% of its workforce. The company will move its focus to productive R&D and immunotherapy drugs.
Tomorrow's Financial Outlook
Tomorrow's ADP private payrolls report will take on more importance, due to the Labor Department not reporting September's nonfarm payrolls on Friday. The economists' consensus estimate is for 180,000 payrolls created in September. In August, 176,000 payrolls were created.
The other report out tomorrow is the weekly mortgage applications index. Since interest rates have fallen over the last three weeks, applications have surged in both new purchases and refinancings.
The ECB will release its monthly monetary policy decision tomorrow morning before the US market opens. No change is expected in the policy rate. Recently, ECB officials have hinted that another LTRO is possible because there continues to be a lack of lending to small and medium businesses.
Also due out are Australia's new home sales and August trade balance.
The only major earnings report on the calendar is from Monsanto (NYSE:MON).
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