Congress Makes Progress on Passing a Continuing Resolution
This morning, the potential negative market catalyst from
Italy's government was averted when former Prime Minister Silvio
Berlusconi announced his support for current Premier Enrico Letta's
government. Earlier in the morning, it was reported that 22
ministers from Berlusconi's party would vote in support of Letta's
party, despite the earlier ruckus they had caused by threatening to
resign from the Italian Senate. Italian stocks were the best
performers in Europe today; the
(INDEXBIT:FTSEMIB) was up 0.68%.
US stock futures were down almost 1% by the time the market opened. However, after a brief dip in the opening hour, equities rallied back to close down 0.34% in the S&P 500 (INDEXSP:.INX). The materials and energy sector stocks were the best performers today. These two groups have been the worst performing sectors this year. However, the worst performing sector today was consumer staples. The ADP's report of September private payrolls showed a net gain of 166,000 jobs. The consensus economists' estimate saw 180,000 jobs created. In addition, the prior month's 176,000 gain was revised down to 159,000.
Some of today's negativity was also due to a statement from the Asian Development Bank. The bank said that developing Asian countries (ex-Japan) would only grow at 6% this year and by 6.2% next year. Its prior estimate in July forecast 6.3% growth this year and 6.4% next year.
Gold recovered from yesterday's 3% slide, making up two-thirds of those losses today. Treasuries rallied after the private payroll report and held on to most of their gains throughout the rest of the day.
The negotiations in Washington continued to play a dominant role in today's price action. Fifteen Republicans in the House said that they would support a continuing resolution that did not include changes to Obamacare. If 17 Republicans would vote in favor of such a bill, along with Democratic support, it could pass through the House.
Tomorrow's Financial Outlook
Weekly initial jobless claims will be released tomorrow morning. Recently, jobless claims have trended down to their lowest level in seven years. Another report due out is the ISM's survey of service-based growth in September. In August, the index rose to an eight-year high at 58.6. Lastly, August factory orders will be reported. Economists are estimating only 0.2% monthly growth, despite very optimistic manufacturing surveys.
Important economic releases across the globe include China's non-manufacturing PMI, the eurozone's services PMI, and eurozone retail sales. Last month, non-manufacturing growth in China reached the second lowest level since the index was created in 2011.
The only major earnings report scheduled for tomorrow is from Constellation Brands ( STZ ).