The market is a bit higher in early trading after a couple of better than expected economic reports. The ADP Employment report showed the private sector added 162,000 payrolls in September, which was above the 133k expected increase. Separately, the ISM Services index for September rose to 55.1 from 53.7 last month.
But the service sector readings in Europe (and China) were not quite as strong as here in the US. In Europe France, Germany, Spain and the UK all saw worse than expected service PMI readings. Italy was above expectations, but at 44.5 it is still a weak reading pointing to contraction. The overall Eurozone Services PMI was a low 46.1. Europe’s markets are flattish as Spain’s PM continues to deny requests for a bailout.
In Asia, markets were mixed after China’s services PMI fell to a 7-month low of 53.7 (from 56.3 previously). China’s markets remain closed for the holiday.
In earnings news, FDO is trading higher on an in-line earnings report, while MON is trading lower after reducing forward guidance.
Oil prices have been plummeting this morning. Last quote I saw was $88.88. The upside would be if this helped to bring down gas prices and boost consumer sentiment, but I’m sure you’ve noticed prices at the pump seem to go up a lot faster than they come down. Go figure.
Gold prices are up a touch to $1780.
Trading comment: The S&P 500 has been trading in a fairly tight range for the last 6 days. If you pull up a chart of the SPX, you’ll see that it has basically been straddling its 20-day moving average, which is sloping higher. So if it breaks from this pattern and closes below its recent range that would leave the door open to a test of the 50-day average which we haven’t seen in awhile. The 50-day average currently resides near the 1418 level. I would be surprised to see the market continue to power higher without a little bit more of a pause. I understand that lots of folks are hoping for more of a pullback to put money to work, but the market hasn’t tested its 50-day average since late July.