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Global Markets Grind Higher For Another Day


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

Global markets continued to grind higher today. Most market participants were waiting for the ECB meeting tomorrow morning before making any major decisions. Most Chinese equity indices finished higher overnight even though volume was more than double the average. The European stocks indices that would be most sensitive to a move tomorrow by the ECB, the Italian FTSEMIB, gained 1% today and was among the best performing in the region.

The private payrolls report from ADP saw a net gain of 208K jobs in the month of November. This was below the 222K expected and down from 233K in the month prior. However, interest rates were ultimately mostly unaffected from the report because it still signified that strong, broad-based job growth was present and that did not alter expectations for Friday's government nonfarm payrolls report. The ISM index of non-manufacturing companies business expectations rose to 59.3, ahead of the expectations for 57.5.

US equities moved steadily higher without any great fanfare. Materials, industrials, and energy stocks lead, however. These sectors have been beaten down lately, but that was not the case today. The S&P 500 (SPX) finished up 0.38%. Tech stocks were weak early on, but that proved to  be short lived. Apple (AAPL), which has been a drag on the broad indices lately, finished up 1.06% today. In a research report this morning, JMP Securities cited higher iPhone 6 and iPad sales from Black Friday to Cyber Monday, and raised their price target to $150. That is the highest target amongst analysts covering the company.

Tomorrow's Financial Outlook

The major event tomorrow is the ECB rate decision and subsequent press conference by President Mario Draghi. Investors broadly expect the ECB to announce no new measures at the meeting tomorrow, but revise its economic forecasts down for next year. However, they do not expect that to reverse any of the trends present in the markets because it will almost guarantee further action by the central bank next year, such as expanding the scope of assets its purchases.

The only major US economic reports tomorrow is weekly jobless claims. Last week's claims rose to 313K after remaining below 300K for much of the fall. The jump can be explained away as due to the holidays. Claims are expected to fall back down to 295K, but it is likely they will be volatile.

Tomorrow is the only day with a substantial amount of earnings reports. Kroger (KR), Sears Holding (SHLD), Dollar General (DG), American Eagle Outfitters (AEO), Smith & Wesson (SWHC), and Ulta Salon (ULTA) are all scheduled to report.

Twitter: @Minyanville

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No positions in stocks mentioned.

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