Morning Minutes

Payroll and Earnings Growth Drive Stocks Upward




Building on strong gains in Europe this morning, where the Dax is up 1.4% and the FTSE is up 1.2%, US index futures are up 0.2%-0.7% this morning, with the NASDAQ trying to bounce back from yesterday’s 1.8% drop leading the way. Commodities are also climbing this morning with WTI crude oil up 1.2% and copper up 0.5%.

Stocks and commodities are continuing to respond to positive economic and earnings news. US ADP private sector payrolls growth accelerated to 742K from 565K last month. While this came in a bit short of the 800K street estimate most of the 58K shortfall can be accounted for by 48K upward revision to the March number.  European service PMI reports released earlier today hovered around the 50 expansion/contraction dividing line. US non-manufacturing PMI is due at 10:00 am today with the street expecting a reading of 64.3, up from 63.7 last month. Investors may also keep an eye on the leading new orders (street 56.6), and prices paid (street 73.3 vs previous 74.0) after Monday’s Manufacturing PMI survey hinted at growing inflation pressures. Yesterday, US Treasury Secretary (and former Fed Chair) Janet Yellen hinted that increasing inflation could put upward pressure on interest rates but then quickly walked back the comments. Later today, three regional Fed presidents plus Bank of Canada Governor Macklem are speaking, which could shed more light on business conditions and what central bankers are thinking about monetary policy moving forward.  

Meanwhile, earnings continue to clobber street estimates.  Lyft reported a smaller than expected loss overnight (-$0.35 vs street -$0.53). US companies reporting stronger than expected earnings include General Motors ($2.25 vs street $1.04) and Activision Blizzard ($0.84 vs street $0.70). In Canada today, Barrick Gold ($0.29 vs street $0.26) beat the street.

Results due later today are headlined by the insurance sector including Manulife*, Great-West, Sun Life, and MetLife*. Other notable companies reporting later today include Constellation Software, Loblaws, and Gildan Activewear in Canada plus Uber and Etsy in the US.

*Shares of Manulife and MetLife are held in some portfolios managed by SIA Wealth Management.  

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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