What’s the Story?

by CC February 1, 2012 9:24 am • Commentary


U.S. stock futures on Wednesday held gains after Automatic Data Processing Inc. released private-sector payrolls data showing U.S. employers added 170,000 jobs last month. Meanwhile, shares of Amazon.com fell in pre-open after disappointing results.

The ADP figure, which comes ahead of Friday’s monthly nonfarm payrolls report from the Labor Department, “compares to the 2011 monthly average of 160,000 and thus points to a continued recovery but the mediocre pace this far into a recovery still remains frustrating,” said Peter Boockvar, equity strategist at Miller Tabak.

“Friday’s estimate for private sector payroll gains are 165,000, about in line with today’s report. Overall gains are expected to total 145,000 as the government sector continues to shed jobs,” Boockvar added.

U.S. stock-index futures were already higher as Wall Street took a positive read on manufacturing surveys out of Europe and China.


Chinese manufacturing indexes rose in January as the world’s second-biggest economy withstood weaker exports driven by Europe’s debt crisis and a government-induced property slowdown.

The official purchasing managers’ index increased to 50.5 from 50.3 in December, exceeding the median estimate in a Bloomberg News survey for a reading below the 50 level that divides expansion from contraction. The data may have been distorted by a weeklong holiday. A separate gauge from HSBC Holdings Plc and Markit Economics rose to 48.8. India’s manufacturing grew at the fastest pace in eight months.

Premier Wen Jiabao yesterday reiterated his government will “fine-tune” economic policies as needed after the central bank held off on a reduction in bank-reserve requirements that some analysts had forecast for January. Indexes for export orders, imports and employment in the official PMI showed a deeper decline, underscoring an International Monetary Fund warning last week that the euro area’s crisis could trigger another global recession.


ADP reported private-sector jobs rose by 170,000 in January, right in line with economists’ expectations. But another reading from TrimTabs on labor-market activity wasn’t so optimistic.

TrimTabs estimates only 45,000 new jobs were created in January. The firm says the small job figure reflects a drop in withholding tax collections. From TrimTabs:

While some of that decline is likely due to lower Wall Street bonuses this season relative to last, it appears that the balance of the decline is likely to due to weaker job growth.

Its tough to glean too much from these reports ahead of the government’s nonfarm payrolls report due Friday. ADP has a shaky track record of forecasting the Labor Department’s monthly jobs figures. Last month it anticipated 325,000 jobs were added in December. That number was just revised down to 292,000.

By comparison, the government reported 200,000 jobs were added in December.

Economists are currently expecting nonfarm payrolls to jump by 125,000 in January and the unemployment rate is seen holding steady at 8.5%.



Stocks to Watch

Among the companies whose shares are expected to actively trade in Wednesday’s session are Amazon.com Inc. (AMZN), Broadcom Corp. (BRCM) and JDA Software Group Inc. (JDAS).

Amazon’s fourth-quarter earnings fell 57%, and the Internet retailer again warned it could post an operating loss in the current quarter. Shares were down 8.7% at $177.45 in recent after-hours trading.

Broadcom’s fourth-quarter profit slipped 4.5%, failing to match the company’s explosive year-ago earnings growth, though the chip maker’s top line fell less than expected. The company also said it will boost its quarterly dividend by 11%, signaling its desire to satisfy investors during a challenging time for the broader semiconductor sector. Shares were up 1.9% to $35 after hours on the stronger-than-expected core results.

JDA Software swung to a fourth-quarter loss amid sharply higher litigation-related charges as a slowdown in the Americas continued to weigh on the supply-chain company’s revenue growth. Shares dropped 9.7% to $26.60 after hours.


Overnight Headlines (Links)


EU Blocks Merger of Exchanges

Romney Wins Big in Florida Primary

Assange Case Reaches England’s Top Court


Obama Plans Housing Aid

Factory Data Signal Two-Speed Europe

U.S. Plans Charges on Bond Fraud


Sony Taps Hirai as President

Amazon’s Spending Hurts Profit

Aetna’s Profit Rises 73%



– 8:15 a.m. ET: ADP private-sector payroll preview

– 10:00 a.m.: ISM manufacturing report

– 10:00 a.m.: Data on construction spending

Key Earnings

Here are companies set to report quarterly results before the opening bell.




Enterprise Products

Franklin Resources




Marathon Oil

Marathon Petroleum



Northrop Grumman

Thermo Fisher Scientific

Tupperware Brands

W.R. Grace


After the bell, results are expected from these companies:




AvalonBay Communities

BMC Software


Chipotle Mexican Grill

Crown Holdings

Electronic Arts

Equity Residential

Essex Property Trust

Fortune Brands Home

Green Mountain Coffee

JDS Uniphase

Las Vegas Sands


Regency Centers


Tractor Supply