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Payroll Growth Fails to Live Up to Market Expectations
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

US equities started the day down but climbed their way back to positive as the day progressed. Investors were clearly waiting for the result of the ECB meeting scheduled for tomorrow morning, although there was very substantial activity in Euribor and Fed Funds futures markets. The S&P 500 (INDEXSP:.INX) closed up 0.13% with consumer discretionary stocks leading. Small-cap and tech stocks both outperformed. European and Chinese stocks were broadly lower.

Copper prices fell overnight due to a report from China that the government was launching an investigation to determine whether or not warehouse receipts were accurate and if the metal had been rehypothecated numerous times.

Life insurance stocks continued to outperform as interest rates continued to creep higher. The sector was boosted by news that Dai-ichi Life Insurance (TYO:8750) was pushing ahead with its purchase of Protective Life (NYSE:PL) for $5.7 billion or about $72 per share, a 38% premium over its closing price on May 30. Chinese solar stocks were weaker following news that the US Fair Trade Commission would crack down on the group, while US solar stocks received a boost.

There were three notable economic data reports today. The ADP private payrolls report saw net jobs increase by 179,000 in May, worse than the 210,000 expected and down from a lower revised 215,000 last month. April's US trade balance widened to -$47.2 billion, worse than the -$40.8 billion expected and accompanied by a -$3.8 billion revision lower for the prior month. The real goods trade deficit is the largest in more than six years. The report caused GDP tracking estimates to be lowered by 0.4% for the second quarter and 0.2% for the first. Goldman Sachs now forecasts 3.2% and -1.2% growth for the respective quarters. Lastly, the ISM services index continued to show strong growth, rising to 56.3 from 55.2 in April.

Tomorrow's Financial Outlook

The only economic data point for tomorrow is weekly jobless claims. Claims are expected to rise to 310,000 from 300,000 in the week prior. The four-week moving average currently stands at 311,500. Also, the Fed will release the Change in Net Worth of Households for the first quarter.

The most important event for risk assets tomorrow is the ECB rate decision. The decision will be released at 12:45 p.m. local time (7:45 a.m. EDT) followed by a press conference from President Mario Draghi 45 minutes later. Fifty-eight of 60 economists expect that the central bank will lower its main policy rate by at least 10bps and make similar cuts to deposit rates. In addition, many economists think the bank will announce other credit-enhancing measures such as direct loan financing to banks, long-term refinancing loans, or purchases of asset-backed securities. The euro has sold off against other major currencies, and European equities and sovereign bonds have all rallied substantially in anticipation of this event.

Joy Global (NYSE:JOY), Ciena (NYSE:CIEN), Vail Resorts (NYSE:VAIL), and Verifone Systems (NYSE:PAY) are scheduled to report earnings.


Twitter: @Minyanville

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.
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No positions in stocks mentioned.

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.

Payroll Growth Fails to Live Up to Market Expectations
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

US equities started the day down but climbed their way back to positive as the day progressed. Investors were clearly waiting for the result of the ECB meeting scheduled for tomorrow morning, although there was very substantial activity in Euribor and Fed Funds futures markets. The S&P 500 (INDEXSP:.INX) closed up 0.13% with consumer discretionary stocks leading. Small-cap and tech stocks both outperformed. European and Chinese stocks were broadly lower.

Copper prices fell overnight due to a report from China that the government was launching an investigation to determine whether or not warehouse receipts were accurate and if the metal had been rehypothecated numerous times.

Life insurance stocks continued to outperform as interest rates continued to creep higher. The sector was boosted by news that Dai-ichi Life Insurance (TYO:8750) was pushing ahead with its purchase of Protective Life (NYSE:PL) for $5.7 billion or about $72 per share, a 38% premium over its closing price on May 30. Chinese solar stocks were weaker following news that the US Fair Trade Commission would crack down on the group, while US solar stocks received a boost.

There were three notable economic data reports today. The ADP private payrolls report saw net jobs increase by 179,000 in May, worse than the 210,000 expected and down from a lower revised 215,000 last month. April's US trade balance widened to -$47.2 billion, worse than the -$40.8 billion expected and accompanied by a -$3.8 billion revision lower for the prior month. The real goods trade deficit is the largest in more than six years. The report caused GDP tracking estimates to be lowered by 0.4% for the second quarter and 0.2% for the first. Goldman Sachs now forecasts 3.2% and -1.2% growth for the respective quarters. Lastly, the ISM services index continued to show strong growth, rising to 56.3 from 55.2 in April.

Tomorrow's Financial Outlook

The only economic data point for tomorrow is weekly jobless claims. Claims are expected to rise to 310,000 from 300,000 in the week prior. The four-week moving average currently stands at 311,500. Also, the Fed will release the Change in Net Worth of Households for the first quarter.

The most important event for risk assets tomorrow is the ECB rate decision. The decision will be released at 12:45 p.m. local time (7:45 a.m. EDT) followed by a press conference from President Mario Draghi 45 minutes later. Fifty-eight of 60 economists expect that the central bank will lower its main policy rate by at least 10bps and make similar cuts to deposit rates. In addition, many economists think the bank will announce other credit-enhancing measures such as direct loan financing to banks, long-term refinancing loans, or purchases of asset-backed securities. The euro has sold off against other major currencies, and European equities and sovereign bonds have all rallied substantially in anticipation of this event.

Joy Global (NYSE:JOY), Ciena (NYSE:CIEN), Vail Resorts (NYSE:VAIL), and Verifone Systems (NYSE:PAY) are scheduled to report earnings.


Twitter: @Minyanville

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.
< Previous
  • 1
Next >
No positions in stocks mentioned.

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.

Payroll Growth Fails to Live Up to Market Expectations
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

US equities started the day down but climbed their way back to positive as the day progressed. Investors were clearly waiting for the result of the ECB meeting scheduled for tomorrow morning, although there was very substantial activity in Euribor and Fed Funds futures markets. The S&P 500 (INDEXSP:.INX) closed up 0.13% with consumer discretionary stocks leading. Small-cap and tech stocks both outperformed. European and Chinese stocks were broadly lower.

Copper prices fell overnight due to a report from China that the government was launching an investigation to determine whether or not warehouse receipts were accurate and if the metal had been rehypothecated numerous times.

Life insurance stocks continued to outperform as interest rates continued to creep higher. The sector was boosted by news that Dai-ichi Life Insurance (TYO:8750) was pushing ahead with its purchase of Protective Life (NYSE:PL) for $5.7 billion or about $72 per share, a 38% premium over its closing price on May 30. Chinese solar stocks were weaker following news that the US Fair Trade Commission would crack down on the group, while US solar stocks received a boost.

There were three notable economic data reports today. The ADP private payrolls report saw net jobs increase by 179,000 in May, worse than the 210,000 expected and down from a lower revised 215,000 last month. April's US trade balance widened to -$47.2 billion, worse than the -$40.8 billion expected and accompanied by a -$3.8 billion revision lower for the prior month. The real goods trade deficit is the largest in more than six years. The report caused GDP tracking estimates to be lowered by 0.4% for the second quarter and 0.2% for the first. Goldman Sachs now forecasts 3.2% and -1.2% growth for the respective quarters. Lastly, the ISM services index continued to show strong growth, rising to 56.3 from 55.2 in April.

Tomorrow's Financial Outlook

The only economic data point for tomorrow is weekly jobless claims. Claims are expected to rise to 310,000 from 300,000 in the week prior. The four-week moving average currently stands at 311,500. Also, the Fed will release the Change in Net Worth of Households for the first quarter.

The most important event for risk assets tomorrow is the ECB rate decision. The decision will be released at 12:45 p.m. local time (7:45 a.m. EDT) followed by a press conference from President Mario Draghi 45 minutes later. Fifty-eight of 60 economists expect that the central bank will lower its main policy rate by at least 10bps and make similar cuts to deposit rates. In addition, many economists think the bank will announce other credit-enhancing measures such as direct loan financing to banks, long-term refinancing loans, or purchases of asset-backed securities. The euro has sold off against other major currencies, and European equities and sovereign bonds have all rallied substantially in anticipation of this event.

Joy Global (NYSE:JOY), Ciena (NYSE:CIEN), Vail Resorts (NYSE:VAIL), and Verifone Systems (NYSE:PAY) are scheduled to report earnings.


Twitter: @Minyanville

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.
< Previous
  • 1
Next >
No positions in stocks mentioned.

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.

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