Newspaper article The Canadian Press

Traders Look to Latest Reading on Economy after Jobs Shock, Earnings Reports

Newspaper article The Canadian Press

Traders Look to Latest Reading on Economy after Jobs Shock, Earnings Reports

Article excerpt

Traders look to economic data, earnings

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TORONTO - Traders will likely be cautious this week as investors try to decide if a huge miss on job creation expectations last month indicates the U.S. economy has run into a rough patch.

Also, the fourth quarter earnings reporting season kicks into gear and investors will take in reports from major financial institutions and other market bellwethers, including General Electric and chip giant Intel.

There was a big surprise on markets at the end of the week when data showed the U.S. economy cranked out only 74,000 jobs as opposed to the 200,000 that economists had forecast.

Traders struggled to find a concrete reason for the huge miss as expectations had ratcheted higher in the wake of a steady stream of recent positive economic data.

"All of the recent data has been so good that everyone thought that this was a slam dunk," said Wes Mills, chief investment officer at Scotia Asset Management.

"And so this is going to raise doubts across the board and clearly sentiment is going to take a hit on this. The U.S. had a huge year (in 2013), so maybe we spend the first half of the year consolidating that and we need further evidence before we take things higher."

The jobs data also raised doubts about what the Federal Reserve might do about continuing to wind up its key stimulus program, the monthly purchase of bonds.

The central bank decided in December to cut the key stimulus program from $85 billion a month to $75 billion, making further cuts contingent on economic performance, particularly the job market. The change came into effect this month.

It is a relatively light week for economic data so traders will look to the release mid-week of the Fed's latest reading on the economy. That regional economic survey -- the so-called Beige Book -- comes out on Wednesday afternoon.

Meanwhile, traders anticipated earnings reports from a variety of financial heavyweights this week, including JPMorgan Chase, Wells Fargo and Bank of America.

This earnings season follows a strong 2013 where the S&P 500 rocketed about 30 per cent, helped in large measure by Fed stimulus. Now investors want to see if strong earnings and revenue can cement that gain. …

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