Dollar Reversal Sparks Equity Gains
Today's financial recap and tomorrow's financial outlook.
Last night, the Reserve Bank of Australia (RBA) lowered interest rates by 25bps, something that had not been expected by forecasters, but was priced into the market. The Australian Dollar (AUD) fell by more than 1.5%, but that weakness was reversed throughout the US trading session as the dollar weakened substantially. By the end of trading the AUD was actually positive.
The S&P 500 (SPX) also benefited from these changes in trends because a persistently low price of oil is not positive for the US economy, on net, and earnings projections have been reduced because of it. The main beneficiaries today were some of the beaten down sectors this year - namely financials and energy stocks. The one negative standout was biotech, which had strong performance in January, closed down in excess of 4%, even though Gilead Sciences (GILD) announced a new $15 billion buyback after the close of trading. All 10 sectors of the SPX closed positive.
Factory orders for December contracted by 3.4%, which was worse than the -2.7% expected, and November's figure was also revised lower. This prompted some minor downgrades to fourth quarter GDP forecasts.
Tomorrow's Financial Outlook
The major event tomorrow will be the private payrolls reported by ADP, in the morning at 8:15am ET, for the month of January. Net job growth is expected to be 220K, down from 241K in the month prior. Jobless claims have increased in January, which tilts the potential for a miss of the expected figure to the downside. The national ISM services index will also be reported, which is expected to decline to 56.4 in January from 56.5 in the month prior. Recall yesterday that the similar manufacturing gauge declined by 1.6 points to 53.5.
Overnight, the private survey of services companies in China will be released for the month of January. Earlier this week the official government gauge showed a marginal downtick in activity. Also scheduled for release is services PMI's in the UK and eurozone in the morning, and European retail sales for December.
Companies scheduled to report earnings tomorrow include Merck (MRK), General Motors (GM), Marathon Petroleum (MRO), Humana (HUM), Ralph Lauren (RL), 21st Century Fox (FOX), Under Armour (UA), Keurig Green Mountain (GMCR), and Prudential Financial (PRU).
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