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US Stocks Follow Europe Lower; Investors Await May JOLTS report


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

US markets followed European stocks lower today. German industrial production for May fell 1.8% month-on-month; expectations were that the figure would come in unchanged. The lower number caused some firms to reduce their second-quarter GDP forecasts for Europe. The French CAC (INDEXEURO:PX1) closed on its low, down 1.41%.

Health care, materials, industrials, and energy stocks were notable underperformers today in the S&P 500 (INDEXSP:.INX). These four basic sectors all experienced 90% down days (which indicates broad-based selling), much more than the -0.39% performance from the index itself. Crude oil continued to drop despite unconfirmed speculation that a military coup was brewing in Iraq and could materialize if the government was unable to form a new Parliament.

Long-duration Treasuries rallied today with the 10-year yield falling 2.5 basis points to 2.61%. Shorter-duration notes sold off as investors continued to price in earlier rate hikes from the Fed following last Thursday's payrolls report. Goldman Sachs economists moved forward their estimates for when the Fed may begin hiking rates to the third quarter of 2015 from the first quarter of 2016. Most economists already believe the Fed will hike in the third quarter of next year.

Tomorrow's Financial Outlook

The economic calendar is very light this week, but tomorrow is an exception. The May JOLTS job data, which is the truest gauge of employment activity for a given month, will be released tomorrow morning. Also scheduled to be released is May consumer credit growth. Fed Presidents Kocherlakota (dovish) and Lacker (hawkish) are both lined up to give speeches tomorrow afternoon.

Overnight, UK industrial and manufacturing production will be released. Also scheduled to be reported is the German trade balance from May, which will show the effects of Russia sanctions enacted earlier this year. A Food & Agriculture report earlier today noted that the negative impact of disrupted shipments of wheat from Ukraine has diminished. 

Alcoa (NYSE:AA) will open up second-quarter earnings tomorrow after the market closes. The estimates are currently for EPS of $0.12 and revenues of $5.6 billion.

Twitter: @Minyanville

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