U.S. equities are signaling a flat to slightly lower open ahead of the opening bell. Tuesday’s session saw the first positive session of 2014 as stocks were sharply higher throughout the session. Investors may be cautious today ahead of the Federal Reserve’s latest policy meeting minutes and the ADP private sector payrolls report. Harsh weather conditions across the country continue to affect everything from travel to consumer spending and energy prices. This could skew economic data for January over the next month or so. Volatility fell sharply yesterday as stocks were higher throughout the session. The CBOE Volatility Index (VIX) rose 4.6% and is now back below the $13 level. The data today could provide some added equity movement and any further downside action should increase volatility quickly.
Treasuries are lower this morning but European bonds were bid into the ECB decision tomorrow. There is lingering speculation over a dovish spin after lower inflation, despite a much firmer round of European retail data and German orders. Stocks in Asia bounced after an IMF upgrade in the region, but Europe is mostly weaker. The 10-year yield is now near the 2.95% level but could see 3% today if treasury prices weaken further. The pace of economic updates will quicken a bit with the release of Dec ADP, which analysts expect to post a 205k increase vs. 215k in November. MBA mortgage market index rose 2.6%, purchases sank 0.5% and refis rose 4.6%. EIA energy inventory data will be sized up for pre-"Polar Vortex" levels. The FOMC Minutes to the Dec 17-18 policy meeting may provide further insight on the taper decision. The $21 B 10-year note auction is also on tap and may fare a little more poorly than yesterday’s lukewarm 3-year sale. Be prepared for some big swings today as trader’s position their portfolios before and after the data.
Stock Stories:
Micron (MU) – Chip off the old block – The chip-maker posted better than expected quarterly results last night as the company blew out top-line revenue estimates. Rumors are swirling that its new DRAM chipset has a large order stream from Apple (AAPL). The shares are 9% ahead of the opening bell and rose 210% in 2013.
Constellation Brands (STZ) – Boozy Weekends – The alcohol beverage maker posts better than expected EPS and revenue this morning. The company also is raising its FY14 guidance. The stock is up over 5% in the pre-market.
Major Economic Reports:
6:00 am CT – MBA Purchase Applications – up 2.6% for week
7:15 am CT – ADP Employment Report
9:30 am CT – Oil Inventories
12:00 pm CT – 10-Year Note Auction Results
1:00 pm CT – FOMC minutes
2:00 pm CT – Consumer Credit
