The Day Ahead: Stocks Rally Ahead of Jobs, Manufacturing Data

The first day of September looks to open strongly while investors await key data on employment and manufacturing.
 
About ninety minutes before the opening bell, S&P 500 futures are up nearly 12 points to 1,060 and Dow futures are jumping 75 points higher at 10,081. Interest rates are moving higher in the wake of improved sentiment in equities. The 10 year Treausry note is -0-10 at 101-01 yielding 2.507%. The October delivery FNCL 4.0 is -0-02 at 103-05.

European stocks are also about 1.5% higher and Asian markets finished stronger (a notable exception being China’s Shanghai index, which fell 0.6%).

At 8:15, the ADP Employment Report is anticipated to show that 18,000 private jobs were created in August, according to economists polled by Reuters. Investors will be watching the numbers closely to forecast the official employment numbers released this Friday.

At 10:00, the ISM Manufacturing Report is expected to weaken to 53.0 in August from 55.5 a month before. This will reflect “a broader slowdown in the manufacturing sector as inventory rebuilding wanes,” said economists at BMO Capital Markets.

The economists noted the ISM has already fallen for three consecutive months, and that a 53.0 score would mark an 11-month low.

Still, any score above 50 indicates general growth in the sector.

“This would indicate moderate growth in the one sector of the economy that has punched above its weight in creating jobs this year—generating over one-quarter of the 630,000 increase in private-sector payrolls,” the BMO economists said.

Also at 10:00 is the Construction spending report. A Reuters poll looks for a 0.5% cutback in July, following a 0.1% gain in June.

At 10:45, Federal Reserve Gov. Elizabeth Duke speaks to the Fed summit on stabilizing neighborhoods hit by foreclosure, in Washington.

At 12:30, Dallas Federal Reserve Bank President Richard Fisher speaks on the economy before the Greater Houston Partnership.