Wednesday's Market Drivers - Support from ADP
Stocks look set to rise again Wednesday, thanks to a confirmation of enthusiasm provided by the ADP Private Employment Report. Positive mortgage activity data was supportive as well, and the Philly Fed Bank Chief spoke earlier this morning on monetary policy and the economy. Later, the market will get a test from the latest Factory Order data, though it’s expected to be poor, and the Fed’s Beige Book in the afternoon. The SPDR Dow Jones Industrials (NYSE: DIA), SPDR S&P 500 (NYSE: SPY) and PowerShares QQQ (Nasdaq: QQQ) were all looking green in the premarket.
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Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.The ADP Private Employment Report, which is an estimate of a portion of the federal government’s Employment Situation Report, showed an increase of 198K net jobs in the private sector in February. The result beat economist expectations for a 173K increase, but was less than the prior month revised count of +215K (revised from 192K). Because this data comes just two days before the real news and because it is often off the true data, it usually has little impact. However, today, when the market is seeking reason to confirm yesterday’s record breaking move, it’ll provide support at least through the morning.
The Mortgage Bankers Association (MBA) reported its Weekly Application Survey for the week ending March 1 this morning. It showed a 14.8% increase in the Market Composite Index for mortgage activity, and 15% increases in both the Purchase and Refinance Indexes. Lower mortgage rates helped, plus the passage of holidays.
Philadelphia Fed President Plosser spoke this morning on the topic of Economic Conditions and Monetary Policy. You can read that speech here.
The government will report on U.S. Factory Orders at 10:00 AM ET Wednesday. Economists see the data for January showing a 2.2% decrease in orders, versus the 1.8% increase in December. I’ve regularly pointed to our political issues at the turn of the year as the important reason for economic decline through the period, and this is just another example of the disruption derived from D.C. Last week’s Durable Goods Orders data showed a 5.2% decrease for January, and that was mostly driven by transportation. I would look to the jumbo jet issues at Boeing (NYSE: BA) and Airbus of European Aeronautic (OTC: EADSF.PK) for at least some of the cause.
The latest Petroleum Status Report is due from the EIA at 10:30 AM. At last check for the period ending February 22, U.S. crude oil inventory increased by 1.1 million barrels, and remained well above the upper limit of the average range for this time of year. Total motor gasoline inventory decreased by 1.9 million barrels, but remained in the upper limit of the average range for this time of year. The trend for oil is improving, given increasing expectations for the U.S. economy.
At 2:00 PM ET, look for the Beige Book release of regional economic indicators by the Federal Reserve. Obviously, any information that comes out of the Fed gets special consideration by the market, so you’ll want to pay attention. That said, this data will reflect the economic perspective rather than monetary policy. Keeping with the Fed, Dallas Bank President Richard Fisher is set to speak twice today, in the morning and at an evening event.
The SEC is examining a rule that aims to better automated trading systems that tend to be overwhelmed by selloffs on high volume.
On the corporate news front, Dell’s (Nasdaq: DELL) board of directors indicated the planned sale to Michael Dell and investors was well vetted. We had another viewpoint on DELL when the news broke, and recommend investors continue to hold their shares and contest the deal. The Cowen (Nasdaq: COWN) Health Care Conference highlights presentations by Merck (NYSE: MRK), Amgen (Nasdaq: AMGN), Bristol-Myers Squibb (NYSE: BMY) and Medtronic (NYSE: MDT). Look for shareholder and analyst meetings at Walt Disney (NYSE: DIS), Tyco Int’l (NYSE: TYC), Exxon Mobil (NYSE: XOM), Honeywell (NYSE: HON), ABM Industries (NYSE: ABM) and Safeway (NYSE: SWY). The earnings schedule highlights presentations by American Eagle Outfitters (NYSE: AEO), Asset Acceptance Capital (Nasdaq: AACC), Accuride (NYSE: ACW), Brown-Forman (NYSE: BF.B), Pet-Smart (Nasdaq: PETM) and Staples (Nasdaq: SPLS). Also find news from Aegerion Pharmaceuticals (Nasdaq: AEGR), American Safety Insurance (NYSE: ASI), Big Lots (NYSE: BIG), Biolase (Nasdaq: BIOL), Capital Senior Living (NYSE: CSU), China Lodging (Nasdaq: HTHT), China New Borun (Nasdaq: BORN), Coca-Cola Bottling (Nasdaq: COKE), Compass Diversified (Nasdaq: CODI), Country Style Cooking (Nasdaq: CCSC), CTC Media (Nasdaq: CTCM), Delek US (NYSE: DK), Document Security (NYSE: DSS), DryShips (Nasdaq: DRYS), Endeavor Int’l (NYSE: END), Energy Recovery (Nasdaq: ERII), FairPoint Communications (NYSE: FRP), Fresh Market (NYSE: TFM), Full House Resorts (NYSE: FLL), Furiex Pharmaceuticals (Nasdaq: FURX), Gasco Energy (NYSE: GSX), General Communication (OTC: GNCMA.PK), Gentherm (Nasdaq: THRM), HFF (NYSE: HF), Hovnanian Enterprises (NYSE: HOV), ID Systems (Nasdaq: IDSY), John Bean Technologies (NYSE: JBT), Korn Ferry (NYSE: KFY), LHC Group (Nasdaq: LHCG), Lincoln Education (Nasdaq: LINC), Maidenform Brands (NYSE: MFB), Miller Industries (NYSE: MLR), Mind CTI (Nasdaq: MNDO), MYR Group (Nasdaq: MYRG), NACCO Industries (NYSE: NC), Navidea Biopharmaceuticals (Nasdaq: NAVB), New Mountain Finance (Nasdaq: NMFC), Nortech Systems (Nasdaq: NSYS), NQ Mobile (NYSE: NQ), Oiltanking Partners (Nasdaq: OILT), Osiris Therapeutics (Nasdaq: OSIR), PDI Inc. (Nasdaq: PDII), Phoenix New Media (Nasdaq: FENG), Pozen (Nasdaq: POZN), QR Energy (NYSE: QRE), Quaker Chemical (NYSE: KWR), Sanchez Energy (NYSE: SN), Semtech (Nasdaq: SMTC), SIGA Technologies (Nasdaq: SIGA), SolarCity (Nasdaq: SCTY), SP Bancorp (Nasdaq: SPBC), Speedway Motorsports (NYSE: TRK), Steinway Musical Instruments (NYSE: LVB), TransAct Technologies (Nasdaq: TACT), Vail Resorts (NYSE: MTN), ValueVision Media (Nasdaq: VVTV), VimpelCom (NYSE: VIP), Walker & Dunlop (NYSE: WD), Warren Resources (Nasdaq: WRES) and Willbros (NYSE: WG).
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