Risk Assets Get a Boost from Fed and ECB Policymakers
Today's financial recap and tomorrow's financial outlook.
There were three different reasons cited for the rally. First, overnight Chicago Fed President Charles Evans said that the FOMC should not be in a hurry to raise interest rates and doing so before the right time could end up being a "catastrophe." Second, ECB President Mario Draghi said in a letter to European lawmakers that the central bank was reassessing its monetary policy stance in the beginning of the year and measures may include the purchases of sovereign bonds. Lastly, investors viewed the stability in oil prices as a potentially positive signal that the selling may have been exhausted after a 10% decline in the first three sessions of the year.
All 10 sectors of the S&P 500 (SPX) closed positive today, led by the tech and materials sector. Energy was also very strong, finishing up 2.20%. This sector led the market from the get go with both oil and gas stocks participating. The SPX ended up +1.79% for the day with both the Nasdaq-100 (NDX) and Russell 2000 (RUT) performing strongly as well. Apple (AAPL) performed strongly, which helped the NDX, after its normally seasonally slow start to the year, and is now up 1.37% year-to-date.
Macy's (M) reported after the close of trading that it was starting a series of new initiatives to evolve its business model and invest in continued growth opportunities as consumers change the way they shop. Some analysts interpreted this news to mean that Macy's was moving away from selling its merchandise in malls and focusing more on its online sales. The stock traded down almost 4% in the post-market session.
Tomorrow's Financial Outlook
The main event tomorrow will be the US government release of nonfarm payrolls for the month of December. Economists expect that payrolls grew by 240K in the month, down from 321K in the month prior. The ADP private payrolls report showed a gain of 241K in the month, which compares to the economist forecast of 225K in the government survey. The unemployment rate is expected to decline to 5.7% from 5.8%, and average hourly earnings rise by 0.2% from the prior month.
There is also a number of significant economic data reports due out overnight. China will report its December consumer and producer price indexes, which will be important to watch because of market participants sensitivity to the prospect of new policy easing by the Chinese government. Also due out overnight is Australia retail sales, Germany's industrial production and trade balance, and the UK trade balance.
Synergy Resources (SYRG) is the only major US company scheduled to report earnings tomorrow.
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