US stocks were pummeled on the first trading day in February
following poor manufacturing results. The national ISM
manufacturing index fell to 51.3 in January from 56.5 in the month
prior, well below the economist estimate of 56.0. The poor result
is likely due to the extreme cold weather and does not signify a
negative trend in manufacturing activity, yet it was still
worrisome. The new orders and production components of the survey
Trading activity was very volatile today with composite volume on
the NYSE running at 119% of the already elevated 10-day average.
(INDEXRUSSELL:RUT) lost as much as 3.5% in today's trading, closing
down 3.21% for the session. The
Dow Jones Industrial Average
(INDEXDJX:.DJI) lost 2.07% for the session, closing below its
200-day moving average for the first time since November 2012. In
addition, a key level of technical support was violated when the
(INDEXSP:.INX) broke below 1,772.
Fixed income assets were relatively muted, though, as the sell-off
was mostly constrained to equities. The 10-year Treasury yield
declined by six basis points and benchmark credit indices lost
about two basis points.
Manufacturing PMIs across the rest of the world also left much to
be desired. The official Chinese manufacturing PMI fell 50.5 in
January from 51.0 in the month prior, similar in magnitude to the
drop seen in the private Markit manufacturing survey last week. The
UK manufacturing PMI fell to 56.7 from 57.2 in December 2013. This
is still strong, but it appears to have peaked recently.
January vehicle sales showed poor performance, also due to the
extreme weather during the month.
) sales fell 12% in the month,
) fell 7.5%, and other manufacturers experienced equally poor
results. Total industry sales fell to a seasonally adjusted annual
rate of 15.16 million from 15.30 million in the month prior, worse
than the 15.70 million estimate.
Tomorrow's Financial Outlook
Tomorrow will be the lightest day of the week in terms of
economic-data releases. The only report scheduled for release is
December 2013 factory orders. It is estimated that orders will fall
1.6% from the month prior, after rising 1.8% in November. Fed
Presidents Lacker and Evans will give speeches before noon.
The Reserve Bank of Australia's rate decision overnight will be the
highlight for foreign-exchange markets. Due to
stronger-than-expected inflation data in January, it is expected
that the central bank will temper its easing bias.
There are 31 major US companies scheduled to report earnings
tomorrow. Notable names include
Archer Daniels Midland
Buffalo Wild Wings