The US dollar is strong and equities are weak ahead of a deluge of fresh data.
Just over an hour before the opening bell, Dow futures are down 40 points to 10,623, nearly erasing the 29-point gain seen yesterday, while S&P 500 Futures are 5.90 off points to 1,139.30 after gaining 2.78 points yesterday.
WTI Crude oil is down 51 cents to $78.88 per barrel and Spot Gold is $9.30 lower at $1,133.55 per ounce.
In earnings news, JPMorgan Chase reported that fourth-quarter profit “more than quadrupled on higher revenue from investment-banking fees,” according to Bloomberg News. The nation’s second-largest bank posted a profit of $3.3 billion versus $702 million in the prior quarter. Shares of the company, however, fell “as the retail bank posted a loss and credit provisions increased.”
Key Events Today:
8:30 ― It seems no matter how long the Federal Reserve keeps policy loose, the Consumer Price Index remains benign. In December the both the headline number and the core inflation (which excludes volatile food and energy prices) are set to rise just 0.1%, and in each case predictions range from flat to 0.2%. A month before the core number was flat while the headline jumped o.4% but the latter was due almost solely to energy costs.
“High unemployment and weak demand continued to keep inflationary pressures in check through the end of 2009,” said analysts at IHS Global Insight. “Energy prices remained silent through the holiday season, though food prices should record a slight gain. . . . Barring a highly improbable surge, the biggest story from the upcoming report is bound to be the annual decline of the CPI in 2009, which would be its first drop in 54 years.”
8:30 ― The decade’s first regional look at manufacturing is expected to show a rebound from a sluggish December. The Empire State Manufacturing Survey unexpectedly took a dip to +2.6 to close the year after cruising as high as +34.6 just two months before (levels above zero indicate growth). For January economists are looking for a 13.0 score, which isn’t inspiring but at least it’s a clear growth marker.
“This notoriously volatile measure is expected to retrace part of December’s 21-point plunge, and climb from 2.6 to 11.0 in January, a level that indicates moderate growth in the sector,” predict economists at BMO Capital Markets. “Note that the employment sub-index turned negative last month, as manufacturers continue to expand productivity and perhaps hours worked, rather than their staffs, to meet new demand.”
9:15 ― All analysts are expecting Industrial Production to post a second consecutive month of growth in December but few are expecting the report to equal November’s 0.8% jump. The consensus is to see a 0.6% rise, which isn’t bad ― the problem is hat hours worked, which is also a forecaster of employment, fell 0.4% in December.
“Businesses are beginning to rebuild their inventories, which is stimulating demand,” said economists at BBVA. “In particular, high tech industrial production is expected to increase for the third month in a row, which could indicate that capital spending on equipment and software could rise again in 4Q09.”
10:00 ― With unemployment still in double-digits, expectations for Consumer Sentiment remain modest despite sizable stock market gains and lots of talk about the recession ending. The Reuters/U of Michigan is expected to rise 1.5 points to 74 in January, with expectations ranging from 72.5 to 75.0.
Still, the modest gain is consistent with a two-year apex, noted economists at IHS Global Insight. “Sentiment usually improves with the start of a new year, and 2010 should be no exception,” they added. “A rising stock market is restoring household wealth, the economy is growing, and employment is near a turning point. Consumers are still very cautious, but their confidence is gradually rising.”
