The People's Bank of China said overnight in a Q&A statement
posted on its website that a larger than expected trade surplus and
the US's delayed exit from QE had led to significant foreign
capital inflows into the country. Because of this, the central bank
said that credit expansion in the country was relatively large in
September. In other global news, UK jobless claims fell more than
anticipated in September.
US equities were buoyed by news that Congress had come to an
agreement on extending the debt limit and re-opening the
government. The proposed deal by the Senate -- which, at the time
of this writing, is set to be voted on later this evening -- would
re-open the government until January 15 and extend the debt limit
until February 7. Under the terms of the deal, the Treasury
department would be able to use extraordinary measures to extend
its cash position until July once its borrowing power is exhausted.
House Republican officials endorsed the plan, even if it requires
bipartisan support to be passed.
(INDEXSP:.INX) rallied 0.7% in the opening minutes on the news and
eventually closed up 1.38%. Financial sector stocks were the best
performers. Technology and industrial stocks were the worst
performers. The Fed's Beige Book saw growth continuing at a modest
to moderate pace. Business contacts noted that they had restrained
long-term capital investment due to uncertainties over the
Affordable Care Act and debt ceiling. The NAHB survey of builder
sentiment declined to an index reading of 55 from last month's 57.
The economist estimate was for no change.
In earnings news, the big story was banks as
Bank of America
) all beat analysts' expectations. Financial sector stocks rose
2.04% today. After the close, IBM (
) reported earnings. The company missed on the current quarter's
revenues and reaffirmed guidance for full-year EPS.
Tomorrow's Financial Outlook
The US will release the prior week's jobless claims in the morning
before the market opens. Jobless claims are expected to fall to
335,000 from 374,000 in the prior week. The prior week's claims
were negatively affected by two weeks of backlogs due to computer
upgrades in two states. The 4-week moving average of claims is
currently at 325,000. The Philadelphia regional manufacturing
survey is expected to fall to 15.0 from 22.3 last month. The
survey's reading would still indicate strong growth.
Should all things go as planned this evening, the government should
re-open tomorrow and the debt ceiling will be extended until
Global market-moving news includes UK retail sales, Japanese
machine tool orders, and Australian business confidence.
Thirty-two major US companies will report earnings for the third
quarter tomorrow. Notable reports include
Fifth Third Bancorp