EmailWell, the market wasted little time on Tuesday making up Monday's losses. The S&P 500 advanced eight points, or 0.5%, in a move that one couldn't really characterize as being offensive-minded.
Granted the technology sector (+0.6%) was the best-performing sector, yet the financial, industrials, materials, and consumer discretionary sectors all ended the day with modest losses despite a closing burst of buying interest that helped make things look better for the S&P 500 than they were looking heading into the final hour of trading.
Furthermore, the Dow Jones Transportation Average (-1.2%), the Russell 2000 (-0.5%), and the S&P 400 Midcap Index (-0.4%) were notable underperformers. The fact that they outperformed in the first quarter, though, contributed to a sense that they were largely victims of profit-taking interest, although a revenue warning from Delta (DAL) exacerbated the selling interest in the transports.
The S&P futures this morning are pointing to a relatively flat start for the cash market, which is a far cry from the 3.0% gain registered in the Nikkei overnight as investors there were frontrunning what many expect to be a very dovish policy announcement tomorrow by the Bank of Japan.
The subdued tone in the futures market flows on the heels of an underwhelming performance by European bourses, led by Italy (-1.4%) and Spain (-1.1%).
In addition, the ADP Employment report for March failed to excite participants as it provided a headline disappointment with the indication that only 158,000 jobs were added to private sector payrolls last month. The Briefing.com consensus estimate was pegged at 197,000.
The disappointment, though, isn't as bad as it looks at first blush. The February number was revised up by 39,000 to 237,000. Factoring in the revision, private-sector payrolls increased over the two-month period on the order that was expected before today's release.
Small businesses led the hiring in March, adding 74,000 positions, but gains were seen at medium-sized businesses (+37,000) and large-sized businesses (+47,000) as well. The services sector (+151,000) for almost the entirety of the private-sector payroll gains in March, according to ADP and Moody's Analytics.
The S&P futures lost a little steam after the ADP report, but selling interest has been held in check for the most part. To be sure, any sense of disappointment on the jobs front only adds to the belief that the Fed is going to stay the course with its current policy.
In corporate news, Monsanto (MON) topped the S&P Capital IQ consensus earnings estimate by $0.17 in reporting its quarterly earnings. Monsanto also bumped up its guidance for FY13; however, the new guidance range of $4.40-4.50 is below the current consensus estimate of $4.54. Verizon (VZ) said it has no intention to merge with Vodaphone (VOD); and Caterpillar (CAT) was downgraded by Goldman Sachs to Neutral from Buy, as was Duke Energy (DUK).
The Treasury market has attracted some buying interest and is registering modest gains at the moment, with the 10-year note up three ticks and its yield standing at 1.85%. That move is likely predicated on a defensive-minded concern that Friday's nonfarm payrolls report might also produce a headline disappointment.
