Wednesday is shaping up to be a quiet session for stocks. The ISM services report and ADP data were not enough to shake investors' focus on Friday's jobs report. Meanwhile a decline in the dollar is giving commodities a boost. A volatile overnight session in crude oil has turned into a rally. While gold futures are surging over $20 to $1,139 an ounce. The GLD gold ETF is breaking out past technical resistance with a 1.7% gain.
Asian markets managed a widespread rally but gains were mild. Banks were some of the worst performers. Japan's NIKKEI scored another 15-month high with a 0.4% gain. The Hong Kong Hang Seng rose 0.6% on very strong volume. The Shanghai index gained 0.4%.
European markets were quiet with stocks churning sideways. Unlike Asian markets the banks were the best performers on Wednesday. Volatility in oil sent energy stocks lower. The French CAC-40 lost 0.03%. The German DAX closed with a +0.04% gain. The English FTSE lost 0.14%.
In the U.S. investors were digesting more economic data. The Institute for Supply Management released the ISM services index for December. Economists were expecting a reading of 50.5. The report today came in at 50.1 compared to 48.7 in November. Readings over 50 indicate growth but it failed to meet expectations.
The market's focus is on job growth so it's always interesting to see the ADP employment report, which comes out a couple days ahead of the non-farm payrolls data. The ADP numbers are based off of private employment of 22 million workers among 360,000 employers and does not count government jobs so the numbers tend to be worse than the official Labor Department's. This morning the ADP employment data showed December lost 84,000 jobs. The November reading of -169,000 jobs was revised down to -145,000. Economists were expecting December to show -73,000. While this report was slightly worse than expected it's the smallest amount of job losses since March 2008. ADP claims that construction jobs fell for the 35th month in a row and jobs in the financial industry declined for the 25th month in a row.
Odds are good that the market could trade sideways tomorrow as investors wait for the Friday morning jobs report. Official estimates are looking for a loss of 8,000 jobs in December compared to -11,000 in November. Yet there are plenty of whispers numbers in positive territory with many economists expecting +25,000 to +50,000 jobs and an upward revision for December. Any positive job growth would end nearly two years worth of job losses.
The major averages are hovering around unchanged. The best performers are gold and mining stocks (+3.5%). Oil services and oil are also doing well. Biotechs are showing some strength with the BTK up 1.4%. Cyclicals continue to look strong with the CYC index up 1.2%.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
A quick scan of the OptionInvestor.com play list reveals that FUQI continues to rally and shares have hit our trigger to buy calls. JPM continues to rally up three days in a row. Shares of NUE are soaring with a 3.6% gain. NUE has hit our target to take profits at $49.50. Nimble traders may want to consider buying calls on FLS with its breakout past $100 and its 50-dma.