Stocks Edge Lower After Weak Services Data
US stocks started the trading session in the black as investors look to economic data and earnings for an impetus that will drive the markets in the early days of 2014. The most likely candidate with be the payrolls report released at the end of the week on Friday. Expectations are for an increase of approximately 200K jobs. Prior to the release of the government’s payroll report, investors will need to grapple with the private payroll report released by ADP.
The ADP report will likely give a strong guide toward predicting the government’s payroll report. The 3- and 6-month average of ADP job growth is 195k and 181k, respectively. With this in mind, the government’s payroll report which is generally correlated should notch up numbers on the private side that are similar.
In economic news, The Institute for Supply Management reported that its services index dropped to 53% in December from 53.9% in November. That compared to the 54.8% headline number expected by economists. The new-orders component slumped 7 points to 49.4%, marking the first contraction since July 2009. On a positive note the employment index rose 3.3 points to 55.8%.
Asian stocks were under pressure generating slight headwinds for US equity bourses. The Nikkei slumped 2.35% on the first trading day of the New Year which the Shanghai declined 1.8%. This comes on the heels of a weaker than expected HSBC services PMI which showed a broad based decline in the Chinese economy.
In corporate news, Retailer Men’s Wearhouse (NYSE:MW) has increased its bid for Jos. A. Bank Clothiers (NASDAQ:JOSB) to $57.50 a share from an offer in November of $55, which the latter rejected. Men’s Warehouse has also turned down a proposal from Jos. A Bank, whose shares closed on Friday at $54.41, giving it a market cap of $1.52 billion.
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