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Monday, January 30, 2012

Stocks are expected to remain in tentative mood today ahead of deluge of economic releases this week. Greece’s inability to finalize the deal with its private creditors, despite indications to the contrary in recent days, does not inspire confidence. This morning’s lackluster Personal Income and Outlays reading for December does not help matters either.

The economic calendar is full of market-moving reports this week, with Friday’s non-farm payroll report for January keeping the labor market in focus. Despite adjustments, seasonal distortions could move the Friday jobs numbers in either direction, but the overall trend on the labor market front remains favorable. We will get a preview of the Friday release through ADP’s report on Wednesday, while the weekly Jobless Claims data come out this Thursday.

We will also be getting the ISM readings this week, with the manufacturing report coming out on Wednesday and the service sector survey on Friday. The Chicago PMI, which has an excellent track record of foretelling the manufacturing ISM survey comes out on Tuesday. Other major reports include the Conference Board’s Consumer Confidence reading on Tuesday, the Construction Spending report on Wednesday, and the fourth quarter productivity numbers on Thursday.

The earnings reporting season this quarter has been weaker than what we have been experiencing in recent quarters, though the growth numbers did improve a bit last week. The year-over-year growth rate thus far is roughly half of the roughly 14% at this stage in the third quarter, with most of the growth coming from revenue gains. There aren’t that earnings reports on the docket today. Wendy’s (WEN - Free Report) met earnings expectations on modestly better than expected revenue results. Wolverine Worldwide (WWW - Free Report) , the maker of outdoor shoes, came ahead of earnings expectations, though the company modestly missed revenue expectations and guided lower for 2012.

Sheraz Mian
Director of Research

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