Stocks Closed Lower Yesterday, FOMC Minutes On Tap For This Afternoon Stocks closed lower yesterday. While the Nasdaq led the gains on Monday, they also led the losses yesterday. There was no new news per se, weighing on stocks yesterday. But there was no new news lifting stocks the day before. Although, there is a bit of position squaring going on ahead of Friday's (1/10) Employment Situation report by the Bureau of Labor Statistics (BLS). At the moment, the consensus is looking for 157,000 new jobs being created in December (130K in the private sector and 27K in the public). The unemployment rate is expected to stay the same at 4.2%. And average hourly earnings are expected to come in at 0.3% m/m vs. last month's 0.4% pace, while the y/y rate comes in at 4.0%, in line with last month. Given the Fed's dual mandate of price stability (low inflation) and maximum employment, the jobs report is an important piece of data in helping to shape the Fed's monetary policy. Last month's (November) came in well above expectations. But October's came in well below expectations. Granted, October's was skewed due to strikes and two hurricanes, which made gathering data difficult. But November's was skewed as well with bounce-back data from the hurricanes and the end of the strikes. So there's lots of interest in what the December jobs data will show. After this week's Employment report comes next week's PPI and CPI inflation reports on Tuesday, 1/14 and Wednesday, 1/ 15. With progress on inflation having recently slowed at best (or stalled at worst), investors will be watching closely to see how inflation looks now. At the moment, the Fed expects to cut rates by another 50 basis points this year. But the timing is unclear. And currently, Fed Funds traders, via the CME's FedWatch tool, have a 95.2% probability that the Fed will NOT cut rates at the conclusion of their next FOMC meeting on January 29. But the Fed insists they will remain data dependent and that rate cuts are not on some predetermined trajectory. So every report counts. In other news, yesterday's International Trade in Goods and Servies report showed the trade deficit increasing to -$78.2 billion vs. last month's -$73.6B and views for -$77.6B. The ISM Services Index improved to 54.1 vs. last month's 52.1 and estimates for 53.2. And the Job Openings and Labor Turnover Survey report (or JOLTS for short) came in at 8.098 million job openings last month vs. the previous month's 7.839M and the consensus for 7.650M. Today we'll get MBA Mortgage Applications, Wholesale Inventories, the EIA Petroleum Status Report, Consumer Credit, Weekly Jobless Claims, and the ADP Employment report. While the ADP report is often looked at as a precursor to what the BLS report will say a couple days later, the ADP report has had a spotty track record as of late. Nonetheless, it will be looked at. But the main jobs report comes on Friday. We'll also get the FOMC Minutes today from December's Fed meeting. You can be sure every word will be parsed and analyzed to glean further meaning and possible foreshadowing of what they might do at their next meeting in 3 weeks. In the meantime, the markets are on the defensive for the week. But they are still up YTD, sans the Dow. But there's a lot of week left. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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