Market Waits for Major Economic and Earnings Data

There is a big week on tap for market participants, from key economic data to the busiest week yet of Q4 earnings season. This is in addition to the continuing coronavirus crisis — currently at 360 fatalities with over 17K confirmed cases — and Election 2020 coming into focus with the Iowa caucuses today. That said, most of the information we seek we will need to wait for.

Later this morning, two important manufacturing metrics for January hit the tape: PMI and ISM. While PMI the previous month landed above 50 at 51.7, ISM sank to 47.2% in December. Expectations for January’s ISM headline are for slightly better results, 48.5%, but still in recessive territory.

Construction Spendingfor December will also be out later this morning, with expectations in-line with the previous month’s +0.6% headline. We haven’t seen a negative print on Construction Spending since may and June of last year, though October came close when it posted +0.1%.

Also, both ADP ADP private sector payrolls and non-farm payrolls from the U.S. Bureau of Labor Statistics (BLS) will report this week, on Wednesday and Friday morning, respectively. For December, ADP reported 202K new private-sector jobs created, while BLS posted 145K, with a trailing 3-month average of 184K new jobs. These are terrific numbers this deep into our employment boom, with the Unemployment Rate expected to remain steady at 3.5% — historically low.

Finally, Alphabet GOOGL reports Q4 earnings after today’s closing bell. the Zacks Rank #2 (Buy)-rated company missed earnings estimates in its previous quarter — its third such miss in the past 12 quarters — but averages an 8% positive surprise over the past four quarters. Expectations are for $12.76 per share on $38.44 billion in quarterly revenues.

Analysts will be paying close attention to its cloud business growth, especially after last week’s Microsoft MSFT report posted 62% growth in its Azure cloud segment. Shares of the search giant are up 4.7% year to date, but are off their all-time highs struck just a couple weeks ago.

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