Stocks will have plenty to digest in today's session, with a
host of consequential economic reports on deck. The Jobless Claims
and Personal Income & Outlays readings were overall favorable,
which should set for a favorable tone at the open. And going by the
strong Chicago PMI reading on Wednesday, it is reasonable to expect
further gains from the manufacturing ISM survey coming out a little
later.
Wednesday's loss of momentum in the market followed Bernanke's
Congressional testimony that raised doubts in investors' minds
about further quantitative easing action from the Fed. I don't know
why would there be any need for further Fed bond purchases if the
economy continues to show the resilience it has been showing
lately. But the market appears to expect the Fed to stand behind it
irrespective of the strength in the economy. We will hear more from
Bernanke today, with the Fed Chairman testifying to the Senate. You
can almost guarantee that investors will be sizing up Bernanke's
testimony today to get more color on the odds of further
quantitative easing in the days to come.
The Fed watch aside, investors have two broadly positive
economic releases this morning in the Jobless Claims and Personal
Income & Outlays reports. The monthly Personal Income &
Outlays report for January was a tad shy of expectations, but
pointed to continued positive improvement in the economy.
Wednesday's favorable revision to the fourth quarter GDP, driven
mostly by the Personal Income & Outlays component, is pointing
towards positive momentum coming into the first quarter. The income
strength is particularly noteworthy, as it is likely reflecting
more resilience in the labor market than captured by the official
payroll data.
We will get the official February Jobs numbers on Friday next
week, but all indicators are pointing towards momentum building in
the labor market. This morning's Jobless Claims data is just the
latest in that regard, which will likely get further confirmed by
the employment component of today's ISM report. Initial Jobless
Claims came in better than expected last week - down 2K to 351K vs.
expectations of a modest rise. The prior week's tally was modestly
revised upwards to 353K from the originally reported 351K. The
four-week average, which smoothes out the week-to-week fluctuation,
dropped 5.5K to 354K, the lowest level since March 2008. This key
data series has been consistently moving favorably in recent weeks,
contrary to initial skepticism on the part of some in the market,
pointing to a steadily healing U.S. labor market.
In corporate news, we got a 9% dividend hike from
Wal-Mart
(
WMT
) this morning. We are also getting February same-store sales
numbers from a host of retailers this morning, with better than
expected results from
Costco
(
COST
),
Limited Brands
(
LTD),
and
Zumez
(
ZUMZ
). Shares of
Clear Channel Outdoor
(
CCO
) will be in the spotlight today following the company's
announcement this morning of a special dividend for its Class A and
B shares. After the close on Wednesday, we got weaker than expected
results from telecom equipment maker Finisar (
FNSR
) and auctioneer Sotheby's (
BID
).
Today's economic releases include the
ISM Manufacturing Index
which is expected to increase to 54.7 and
Construction Spending
, both of which are scheduled for release at 10:00 AM EST.
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