EmailThe first day back from the weather-induced shutdown of U.S. markets was a big event, yet the trading itself was largely uneventful. As expected, the market chopped around throughout the session before ending the day essentially where it began.
For the month of October, the S&P 500 declined 2.0%. It would be remiss not to add that the October decline followed a 10% increase from the end of May to the end of September.
The market, therefore, was due for a period of consolidation, although the October pullback coincided with a batch of relatively disappointing earnings reports that suggested the market had gotten ahead of itself with the QE3 trade.
There is nothing different today in that view of things.
Earnings results since yesterday's close have been a mixed bag. Dow component Pfizer (PFE) beat the S&P Capital IQ consensus estimate by a penny but then issued FY12 guidance below the consensus estimate. ExxonMobil (XOM) beat by $0.16, but its earnings were down 7% from the year-ago period. Visa (V) beat by $0.04 on a 15% jump in revenue and said it expects annual net revenue growth in the low double digits.
Separately, China reported PMI data that was seemingly encouraging, as its manufacturing index tipped back into expansion mode with a 50.2 reading for October versus 49.8 in the prior month. The HSBC PMI reading, meanwhile, moved up to 49.5 from 47.9, but remained in contraction territory.
In prior months, the market might have been more responsive to this improvement, yet the headline results were mitigated by an understanding that export activity is still subdued and reflects the troubles in Europe and the slowdown elsewhere.
On another level, the lack of response to China's PMI report is telling in that it suggests the U.S. market is more attentive to the uncertainty surrounding next week's election and the fiscal cliff and what both could portend for global markets.
There is a large batch of data out of the U.S. today, including October same-store sales results from the retailers that have been mostly better than expected.
Notably, there is a lot of labor market information and none of it is particularly uplifting.
Challenger Job Cuts showed a 41% increase in planned job cuts in October to 47,724. That is up 12% from the year-ago period and is the highest level since May.
Initial claims for the week ending October 27 declined by 9,000 to 363,000 (Briefing.com consensus 375,000), which is simply more of the same. Claims have been bounded between 350,000 and 400,000 for many months now and point to job growth that won't be sufficient to bring down the unemployment rate.
On that note, the ADP Employment report, which is now being published under a new methodology designed by Moody's Analytics, showed an estimated 158,000 private sector jobs were created in October. That is up from 114,000 in September, but again it is a level that doesn't suggest a material improvement will be seen in the unemployment rate.
The nonfarm payrolls report from the Labor Dept. will be released tomorrow. The Briefing.com consensus estimate for private sector payrolls currently stands at 130,000.
Q3 productivity was up 1.9% (Briefing.com consensus 1.6%) while unit labor costs fell 0.1% (Briefing.com consensus +1.4%).
The ISM Index for October (Briefing.com consensus 51.0; prior 51.5) will be released at 10:00 a.m. ET and will be joined by the Construction Spending (Briefing.com consensus 0.8%; prior -0.6%) and Consumer Confidence (Briefing.com consensus 72.0; prior 70.3) reports for September at the same time.
But wait. There's more. Crude oil inventory data will be released at 11:00 a.m. ET and auto and truck sales for October will be published throughout the session.
Obviously, there is a lot to take in today.
So far, the futures market has not been jarred, jaded or jazzed by any of it. The S&P futures are up one point and are trading close to fair value, suggesting we may see a fairly flat start to the trading day.
