Emerging market currencies and stock markets remained under
pressure today. The Brazilian real, Turkish lira, Indian rupee, and
Mexican peso all reached new multiyear lows against the US dollar.
Chinese and Japanese markets were off slightly and the Indian
Sensex 30 was down 1.86%. Also, European markets all finished in
US equities opened the day lower and remained lower for much of the
day. Existing home sales were released in the late morning, showing
an extreme rise to a 5.39 million annualized rate -- up 6.5% from
the month prior and the biggest rise in eight years. Much of the
rise was due to a 6.3% gain in single family home sales.
Housing-related stocks showed strong gains for much of the day, but
only closed up 0.2% for the day.
The minutes from the July Federal Reserve monetary policy meeting
were released at 2 p.m. ET and caused a great deal of volatility.
The takeaway: The reduction of asset purchases, a plan that
Chairman Bernanke had put forth at the June meeting, was generally
agreed upon, although a few people urged patience due to slowing
inflation and growth. Equity markets initially dropped as much as
1% on the day before rocketing back into positive territory. Before
the day was out the
(INDEXSP.:INX) had returned to levels that it had started at
shortly before the minutes were released. Treasuries came under
intense pressure, reaching new multiyear highs as the 10-year yield
rose eight basis points to 2.89%.
) reported 2Q earnings this morning, posting in line EPS of $0.95,
but missed on revenues at $17.12 billion vs. estimates of $17.27
billion. Forward guidance for earnings in the rest of the year were
on the low end of the prior guidance, and full-year comparable
sales were guided lower at +1% from +2-2.5%. Target noted on the
earnings call that sales were lower due to higher payroll taxes,
lower labor force participation, and lower income growth.
Additionally, Target noted that increased auto and home sales were
crowding out other spending.
Tomorrow's Financial Outlook
Tomorrow morning, initial jobless claims will be released.
Economists are expecting a gain of 330,000 claims after claims
reached a six-year low of 320,000 in the week prior. The 4-week
moving average of claims currently stands at 332,000. Later in the
day the Kansas City regional manufacturing survey will be released
with no change expected from the prior month.
There will be a few pieces of market-moving news overnight. China
will release manufacturing PMI later this evening and the eurozone
will release the first estimate of manufacturing and services PMI.
Lastly, Canada will release retail sales shortly before the US
Tomorrow is the busiest day of the week for earnings in the US as
earnings season comes to a close.
bercrombie & Fitch
(P) are scheduled to report.