Stocks Finish Lower, One Session Left for 2016

Charles Schwab: On the Market

Posted: 12/29/2016 4:15 PM ET

Stocks Finish Lower, One Session Left for 2016

U.S. stocks closed with mild losses as crude oil prices slipped lower in the wake of an unexpected rise in oil inventories reported by the government. Treasuries and gold were higher and the U.S. dollar dipped. In economic news, weekly jobless claims fell in line with expectations and a preliminary read for the U.S. goods trade deficit unexpectedly widened.

The Dow Jones Industrial Average (DJIA) decreased 14 points (0.1%) to 19,820, the S&P 500 Index lost nearly 1 point to 2,249 and the Nasdaq Composite declined 6 points (0.1%) to 5,432. In moderately-light volume, 572 million shares were traded on the NYSE and 1.3 billion shares changed hands on the Nasdaq. WTI crude oil ticked $0.29 lower to $53.77 per barrel and wholesale gasoline was unchanged at $1.68 per gallon. Elsewhere, the Bloomberg gold spot price added $15.93 to $1,157.60 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.6% lower at 102.65.

Sears Holdings Corp. (SHLD $9) gained ground after announcing that it has obtained a secured standby letter of credit facility, which provides the company with additional liquidity to fund its operations.

Jobless claims drop as expected

Weekly initial jobless claims (chart) fell 10,000 to 265,000 last week, matching the Bloomberg forecast, as the prior week figure was unrevised at 275,000. The four-week moving average dipped by 750 to 263,000, while continuing claims jumped 63,000 to 2,102,000, north of the estimated level of 2,027,000.

The advance goods trade deficit widened unexpectedly to $65.3 billion in November, from the favorably revised $61.9 billion in October, versus projections calling for the deficit to narrow to $61.6 billion.

Treasuries were higher, with the yield on the 2-year note declining 4 basis points (bps) to 1.22%, the yield on the 10-year note dropping 3 bps to 2.48%, and the 30-year bond rate dipping 2 bps to 3.08%.

Despite today's dip, bond yields remain elevated in the wake of upbeat economic data, which has accompanied high expectations for fiscal stimulus, tax reform and regulatory rollbacks following the surprise November Presidential election. Also, the rally in rates was bolstered in early December as the Fed's highly expected 25 bp increase to its target for the fed funds rate included a forecast for more rate hikes in 2017 than it had previously projected. Schwab's Chief Fixed Income Strategist, Kathy Jones discusses the bond markets in a video with Schwab's Vice President of Trading and Derivatives, Randy Frederick titled, How Should Bond Investors Prepare in Light of Fed Outlook for 2017? at www.schwab.com/insights, where you can also find her latest, Changing Conditions: A Bond Market FAQ. Follow Kathy and Randy on Twitter: @kathyjones and @randyafrederick.

Signs of rising inflation have also pressured bond prices and Schwab's Fixed Income Director, Collin Martin, CFA, discusses in his article, Inflation Is Rising: Time to Consider Treasury-Inflation Protected Securities? at www.schwab.com/onbonds.

Tomorrow, the U.S. economic calendar will yield the Chicago Purchasing Mangers Index, expected to decline slightly to 56.8 for December from the 57.6 level in November, but still solidly in expansion territory (above 50).

Europe dips, Asia mixed

European equities dipped following the decline in the U.S. yesterday, while volume remained subdued amid a lack of catalysts as the New Year approaches. Financials continued to be hampered as the markets grapple with the expected bailout of struggling Italian lender Banca Monte dei Paschi di Siena SpA (BMDPD $7). Oil & gas issues modestly added to recent gains in the wake of the strength in crude oil prices as of late, while basic materials slightly gave back a recent jump. In economic news, U.K. home prices rose much more than expected in December. The euro gained ground and the British pound ticked higher versus the U.S. dollar, while bond yields in the region were mostly lower.

Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, offers his latest article, 5 Reasons International Stocks May Underperform In 2017, at www.schwab.com/oninternational, as well as his video with Senior Derivatives Analyst Nathan Peterson titled, Brexit, Germany, China: How the Global Economy Could Fare in the New Year at www.schwab.com/insights. Follow Jeff on Twitter: @jeffreykleintop.

Stocks in Asia finished mixed following the drop in the U.S. yesterday, with global volume, data and conviction remaining hamstrung in the final trading sessions of 2016. Japanese equities dropped with the yen gaining noticeable ground. Mainland Chinese shares dipped and those in Hong Kong rose, with the markets in the world's second largest economy continuing to grapple with festering currency/liquidity concerns in the wake of the U.S. dollar's recent jump, uncertainty following government crackdowns—notably on the real estate and insurance sectors—and lingering uneasiness regarding trade relations with the U.S. For analysis of the impact on the global markets of the U.S. election, see Schwab's Jeffrey Kleintop's, CFA, latest article, President Trump and Global Trade: How Will Campaign Promises Play Out?.

Australian securities gained ground as basic materials extended yesterday's rally. A rise in South Korean stocks was supported by an upbeat read on the nation's November industrial production, which was partially offset by the government's downwardly revised 2017 GDP forecast. Indian equities continued to rebound from a recent selloff to a five-week low, courtesy of festering earnings and economic concerns, along with government reform uncertainty and monetary policy divergence. Schwab's Director of International Research, Michelle Gibley, CFA, offers timely analysis of emerging markets in her latest article, Emerging Markets: Why They Deserve a Place in Your Portfolio, Read both articles at www.schwab.com/oninternational, and be sure to check out our latest article, Why Your Portfolio Needs International Stocks—Despite 2017 Risks at www.schwab.com/insights.

The international economic docket for tomorrow will be light, offering CPI from South Korea and PPI from Italy.

Markets Continue to Run in Place

Charles Schwab: On the Market

Posted: 7/28/2016 4:15 PM ET

Markets Continue to Run in Place

U.S. equities finished mixed and again near the unchanged mark for a third-straight session on the heels of an assortment of earnings reports, headlined by Facebook's upbeat results and disappointing guidance and an earnings miss from Ford. Adding to the mix, investors continued to weigh yesterday's unchanged monetary policy decision from the Fed, while awaiting the Bank of Japan's policy announcement slated for tomorrow. Treasuries were also mixed following a larger-than-expected rise in jobless claims and a disappointing regional manufacturing report, while the U.S. dollar, crude oil and gold were lower.

The Dow Jones Industrial Average (DJIA) declined 16 points (0.1%) to 18,456, while the S&P 500 Index rose 3 points (0.2%) to 2,170 and the Nasdaq Composite closed 15 points (0.3%) higher at 5,155. In moderate volume, 860 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil fell $0.78 to $41.94 per barrel, wholesale gasoline lost $0.02 to $1.30 per gallon and the Bloomberg gold spot price decreased $2.53 to $1,337.55 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.4% lower at 96.71.

Facebook Inc. (FB $125) reported 2Q earnings-per-share (EPS) ex-items of $0.97, above the $0.81 FactSet estimate, as revenues rose 59.0% year-over-year (y/y) to $6.4 billion, topping the expected $6.0 billion. Shares were higher.

Ford Motor Co. (F $13) posted 2Q profits ex-items of $0.52 per share, below the projected $0.60, with revenues rising 5.2% y/y to $36.9 billion, versus the forecasted $36.2 billion. The company said it now sees risks challenging achieving its full-year guidance. F was sharply lower.

Amgen Inc. (AMGN $171) announced 2Q EPS of $2.84, above the estimated $2.74, as revenues rose 6.0% y/y to $5.7 billion, compared to the expected $5.6 billion. AMGN raised its full-year guidance. AMGN traded slightly to the upside.

Whole Foods Market Inc. (WFM $31) achieved fiscal 3Q earnings of $0.37 per share, roughly in line with forecasts, with revenues increasing 2.0% y/y to $3.7 billion, mostly matching expectations. 3Q same-store sales declined 2.6% y/y, versus the anticipated 2.3% decrease. WFM issued full-year EPS and same-store sales guidance that came in below forecasts. Shares finished solidly lower.

MasterCard Inc. (MA $96) reported 2Q EPS ex-items of $0.96, above the projected $0.90, as revenues grew 13.0% y/y to $2.7 billion, exceeding the estimated $2.6 billion. MA was nicely higher.

Hershey Co. (HSY $111) posted 2Q profits ex-items of $0.85 per share, north of the projected $0.78, with revenues increasing 3.7% y/y to $1.6 billion, roughly in line with expectations. HSY issued full-year EPS guidance with a midpoint above estimates, while raising its quarterly dividend by 6.0%. Shares gained solid ground.

For more on the global earnings landscape, see Schwab's Chief Global Investment Strategist, Jeffrey Kleintop's, CFA, article, Earnings estimates are rebounding: what it means for stocks, at www.schwab.com/marketinsight, and be sure to follow Jeff on Twitter: @jeffreykleintop.

Oracle Corp. (ORCL $41) announced an agreement to acquire NetSuite Inc. (N $108) for $109.00 per share in cash, or about $9.3 billion. ORCL was lower, while N rallied over 18%.

Jobless claims rise more than expected

Weekly initial jobless claims (chart) rose 14,000 to 266,000 last week, versus the Bloomberg estimate of an increase to 262,000, with the prior week's figure downwardly revised to 252,000. The four-week moving average declined by 1,000 to 256,500, while continuing claims rose 7,000 to 2,139,000, north of the estimated level of 2,136,000.

The Kansas City Fed Manufacturing Activity Index for July fell to -6 from June's 2 level, compared to forecasts of a rise to 4, with a reading south of zero depicting contraction.

Treasuries finished mixed, as the yield on the 2-year note lost 1 basis point (bp) to 0.71%, the 10-year note was flat at 1.50%, and the 30-year bond rate was 1 bp higher at 2.22%. Bond yields came under some pressure yesterday in the wake of the Federal Open Market Committee (FOMC) leaving its monetary policy stance unchanged as discussed by Schwab's Chief Investment Strategist, Liz Ann Sonders in her commentary, A Hopeful Transmission: Fed Holds Rates Steady, But… Liz Ann notes that the Fed kept rates unchanged but the statement had a notably more positive tone. The labor market has strengthened, inflation is up, global uncertainty has eased, and financial conditions have loosened. The September FOMC meeting should be considered on the table for a rate hike.

Also, amid the recent rally in bond yields, Schwab's Chief Fixed Income Strategist, Kathy Jones discusses in her recent article titled, With a Whimper Instead of a Bang: Is the Great Bond Bull Market Over?. Read both articles at www.schwab.com/marketinsight and follow Liz Ann and Kathy on Twitter: @lizannsonders and @kathyjones.

Tomorrow, the U.S. economic calendar will bring the first read (of three) on 2Q GDP, projected to show growth accelerated to an annualized quarter-over-quarter pace of 2.5%, after expanding by 1.1% in 1Q. Personal consumption is anticipated to accelerate solidly to a 4.3% growth rate after 1Q's 1.5% increase. The consumer is the key driver of U.S. growth and as noted in the latest Schwab Market Perspective: New Records…Same Skepticism, the economy continues to show meaningful signs of improvement. Wages are starting to perk up, appearing to help retail sales post another solid gain in June, while housing continues to be a relative bright spot in the economy, indicating better confidence among consumers. Read more at www.schwab.com/marketinsight and follow Schwab on Twitter: @schwabresearch.

As well, the Consumer Confidence Index is on tap for tomorrow, forecasted to move higher in July to a level of 90.6 from the 89.5 posted in June, as well as the Chicago Purchasing Managers Index, with economists expecting a reading of 54.0 for July, down from the 56.8 registered in June, and the 2Q Employment Cost Index, expected to show a 0.6% increase, matching the prior quarter's rise.

European equities lower, Asia mixed on monetary policy focus

European stocks finished lower, with the global markets reacting to yesterday's unchanged monetary policy decision from the Fed in the U.S. The Bank of Japan is set to deliver its monetary policy decision tomorrow, with expectations of further stimulus measures running high. Also, financials saw some pressure ahead of tomorrow's results from the European bank stress tests and amid some negative reactions to earnings results in the sector, while lower crude oil prices stymied the energy sector. In economic news, German consumer price inflation came in hotter than expected for July, while eurozone economic confidence improved for this month. The euro was higher and the British pound traded lower versus the U.S. dollar, while bond yields in the region were mostly to the downside. Amid the backdrop of heightened volatility in the global markets, Jeffrey Kleintop, CFA, offers Three Reasons Why Now is Not the Time to Retreat from Global Diversification. Read more at www.schwab.com/oninternational.

Stocks in Asia finished mixed as the global markets digest a plethora of earnings reports, along with the unchanged monetary policy decision in the U.S. yesterday, while awaiting tomorrow's conclusion of the monetary policy meeting by the Bank of Japan (BoJ). Expectations have ramped up that the BoJ will deploy more aggressive measures to bolster the economy in the form of coordinated fiscal and monetary stimulus. For more on Japan's potential increased stimulus measures see Jeffrey Kleintop's, article, What investors need to know about helicopter money, at www.schwab.com/oninternational. The yen gained some ground in the wake of the Fed's decision, weighing on Japanese stocks. Mainland Chinese equities ticked higher and those traded in Hong Kong declined slightly, with the markets still grappling with talk that the China Banking Regulatory Commission is discussing stricter curbs on wealth-management products. Meanwhile, Australian securities rose, aided by some strength in basic materials stocks, while markets in South Korea declined, and India finished higher

In addition to the Bank of Japan monetary policy meeting, the island nation is set to release a slew of other reports, including inflation data, personal income, employment figures, industrial production, construction orders, housing starts and retail sales. Other reports on tomorrow's international economic docket include PPI from Australia, trade data from China, as well as GDP figures and CPI from France, Spain and the Eurozone.

Stocks Continue to Climb

Charles Schwab: On the Market

Posted: 7/14/2016 4:15 PM ET

Stocks Continue to Climb

U.S. stocks closed nicely higher with the Dow and S&P 500 adding to all-time highs, aided by a rebound in crude oil prices and as the Bank of England unexpectedly announced no change to its official bank rate, but did hint at the possibility of looser monetary policy in August. Dow member JPMorgan Chase & Co. reported stronger-than-expected 2Q earnings, while Treasuries fell in the wake of a hotter-than-expected read on producer price inflation and the U.S. dollar was pressured by a surge in the British pound. Gold lost ground.

The Dow Jones Industrial Average (DJIA) rose 134 points (0.7%) to 18,506, the S&P 500 Index increased 11 points (0.5%) to 2,164, and the Nasdaq Composite added 28 points (0.6%) to 5,034. In moderate volume, 825 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq. WTI crude oil was $0.93 higher at $45.68 per barrel, wholesale gasoline gained $0.03 to $1.41 per gallon and the Bloomberg gold spot price decreased $8.90 to $1,333.74 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly 0.1% lower at 96.12.

Dow member JPMorgan Chase & Co. (JPM $64) reported 2Q earnings-per-share (EPS) of $1.55, above the $1.42 FactSet estimate, as revenues rose 2.5% year-over-year (y/y) to $24.4 billion, exceeding the projected $24.2 billion. The company said it performed well in all of its major businesses, highlighted by broad core loan growth, particularly in mortgage and commercial real estate. JPM added that outside of energy, both wholesale and consumer credit quality remained very good. Shares gained ground. 

Delta Air Lines Inc. (DAL $41) posted 2Q EPS ex-items of $1.47, compared to the expected $1.42, with revenues declining 2.4% y/y to $10.4 billion, just below forecasts of $10.5 billion. DAL noted that the revenue environment remains challenging, with persistent headwinds from close-in domestic yields and geopolitical uncertainty. DAL closedto the upside.

Yum Brands Inc. (YUM $89) announced 2Q profits ex-items of $0.75 per share, one penny north of estimates, as revenues declined 3.0% y/y to $3.0 billion, versus the forecasted $3.1 billion. The parent of KFC, Taco Bell and Pizza Hut said its worldwide and China division same-store sales were flat y/y, both below expectations. However, YUM finished nicely higher as it raised its core operating earnings growth guidance and said its China division is off to a good start in 3Q.

CSX Corp. (CSX $29) reported 2Q EPS of $0.47, above the anticipated $0.44, with revenues declining 12.0% y/y to $2.7 billion, roughly in line with expectations. The first major rail company to report 2Q results said it continues to expect full-year earnings to decline as the strong U.S. dollar, low commodity prices and energy market transition continue to challenge financial performance. CSX traded higher. 

Bayer AG(BAYRY $103) announced that it has increased its takeover offer for Monsanto Co. (MON $104) from $122.00 to $125.00 per share in cash, valuing the company at $54.7 billion, per Bloomberg, and offered a $1.5 billion reverse antitrust break-up fee. Monsanto acknowledged receiving the revised offer and said its board will review it. MON traded higher.

Jobless claims hold, while wholesale price inflation jumps

Weekly initial jobless claims (chart) remained at 254,000 last week, versus the Bloomberg estimate of 265,000. The four-week moving average fell by 5,750 to 259,000, while continuing claims rose 32,000 to 2,149,000, north of the estimated level of 2,130,000.

The Producer Price Index (PPI) (chart) showed prices at the wholesale level in June rose 0.5% month-over-month (m/m), versus expectations of a 0.3% increase, and compared to May's unrevised 0.4% gain. The core rate, which excludes food and energy, gained 0.4% m/m, topping forecasts of a 0.1% rise, and May's unadjusted 0.3% increase. Y/Y, the headline rate was up 0.3%, versus projections of a flat reading, and the core PPI was 1.3% higher last month, exceeding estimates of a 1.0% gain. In May, producer prices dipped 0.1% and were up 1.2% y/y for the headline and core rates, respectively.

Treasuries finished lower, with the yield on the 2-year note ticking 1 basis point (bp) higher to 0.68%, the yield on the 10-year note rising 6 bps to 1.53%, and the 30-year bond rate gaining 8 bps to 2.25%. Bond yields have shown some signs of life as of late, rebounding from record lows that have come from the U.K. Brexit fallout, which exacerbated global growth concerns, as well as dampened expectations for a Fed rate hike this year. Against this backdrop, read our article, Uncharted Waters: What Record-Low Yields Mean for Investors, at www.schwab.com/insights and follow Schwab on Twitter: @schwabresearch.

Tomorrow, the economic week will end with a flurry of key reports, as we will get June reads on retail sales and the Consumer Price Index (CPI), along with industrial production and capacity utilization. Also, the preliminary July University of Michigan Consumer Sentiment Index will be released. Retail sales are expected to rise for a third-straight month and CPI is projected to grow for a fourth-consecutive month, while industrial production and capacity utilization are estimated to rebound from the prior month's drops. Consumer sentiment is anticipated to be little changed from June's level, and the markets will likely be looking to see how much the relatively positive developments being seen in the U.S. offset the impact from the late-June U.K. Brexit vote.

As noted in the recent Schwab Market Perspective: Looking Beyond Britain, although U.S. consumer confidence has been slightly dented, we see continued supports for consumer spending, including low interest rates, higher wages, better housing data, and a healthy employment picture. If financial markets stabilize, the job market remains healthy, and inflation pressures rise the Fed could look to move toward a more “normal” rate, while also giving it some room to act if/when the U.S. economy begins showing recession risks. Read the whole article at www.schwab.com/marketinsight.

Other releases on tomorrow's economic docket include: the Empire Manufacturing Index and business inventories.

Europe mostly higher despite BoE rate decision surprise, Asia adds to rally

European equities traded mostly higher, with oil & gas and basic materials stocks higher on the heels of the recent optimism in the mining sector and as crude oil prices rebounded from yesterday's drop. Moreover, Italian banking stocks, which have come under fire as of late to weigh on the financial sector in the region, rallied to help boost the markets on eased capital concerns. However, stocks finished off the best levels of the day and U.K. equities reversed to the downside after the Bank of England (BoE) unexpectedly left its benchmark interest rate unchanged at a record low of 0.50%, while Bloomberg economists had anticipated a 25 bps reduction. The BoE voted 8-1 to maintain its monetary policy stance, with the lone dissenter voting for a reduction. The British pound jumped against the U.S. dollar, but the BoE noted in its policy-meeting minutes that "most members of the committee expect monetary policy to be loosened in August." The euro gained ground on the greenback, while bond yields in the region finished mostly higher. With volatility remaining elevated, Schwab's Chief Global Investment Strategist, Jeffrey Kleintop, CFA, provides  Three Reasons Why Now is Not the Time to Retreat from Global Diversificationat www.schwab.com/marketinsight, and be sure to follow Jeff on Twitter: @jeffreykleintop.

Stocks in Asia continued the rally this week that has seen Japanese markets surge on expectations that the nation will deploy more aggressive stimulus measures. Also, global market sentiment seemingly improved, courtesy of eased Brexit and political uncertainty in the U.K., and as last week's stronger-than-expected U.S. labor report helped soothe global growth concerns. Japanese equities added to a solid weekly gain, with the yen dropping late in the session on ramped up speculation that the country could be close to announcing coordinated fiscal and monetary stimulus measures. For more on Japan's potential increased stimulus measures see Schwab's Jeffrey Kleintop's, article, What investors need to know about helicopter money. Australian and Indian securities gained ground, while South Korean listings also ticked higher on the heels of the Bank of Korea's decision to keep its benchmark interest rate unchanged.

However, performance in China was mixed, with mainland shares declining and stocks in Hong Kong advancing. The moves in China followed yesterday's mixed trade report and came ahead of tonight's flood of economic reports from the nation, with industrial production and retail sales data being accompanied by 2Q GDP, forecasted to show y/y growth slowed to 6.6% from 6.7% in 1Q. Schwab's Jeffrey Kleintop discusses China data in his article, Trust but Verify: Five Independent Indicators of China's Economy. Also, Schwab's Director of International Research, Michelle Gibley, CFA, offers 5 Reasons China Won't Crash the Global Economy in 2016. Read all the articles at www.schwab.com/oninternational.

Tomorrow, the international economic docket will be headlined by the aforementioned plethora of releases from China, while reports from across the pond will include the trade balance from Italy, construction output from the U.K. and the trade balance and CPI for the Eurozone.

Stocks Disagree on Direction Ahead of Jobs Data

Charles Schwab: On the Market

Posted: 7/7/2016 4:15 PM ET

Stocks Disagree on Direction Ahead of Jobs Data

U.S. stocks closed the trading session mixed with some modest early gains fading as investors may have been exercising some caution ahead of tomorrow's June labor report release. Crude oil prices reversed solidly lower on the heels of a weekly report that showed stockpiles fell less than forecasted, while weekly jobless claims declined and ADP reported a better-than-expected increase for private sector jobs. Treasuries and gold were lower and the U.S. dollar was higher.

The Dow Jones Industrial Average (DJIA) declined 23 points (0.1%) to 17,896, the S&P 500 Index decreased 2 points (0.1%) to 2,098, and the Nasdaq Composite added 18 points (0.4%) to 4,877. In moderate volume, 864 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil was $2.29 lower at $45.14 per barrel, wholesale gasoline dropped $0.07 to $1.36 per gallon and the Bloomberg gold spot price decreased $3.76 to $1,360.02 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% lower at 96.27.

PepsiCo Inc. (PEP $107) reported core 2Q EPS of $1.35, above the $1.29 FactSet estimate, on revenues of $15.4 billion that matched expectations. The snack and soft drink maker credited strength in the U.S. market and its cost-cutting initiatives that were able to overcome weaker sales abroad. PEP also raised its full-year forecasts. Shares of PEP closed nicely higher.

Danone SA (DANOY $14) has agreed to buy WhiteWave Foods Co. (WWAV $56) for $10 billion, in a move to add the Denver-based company's popular Silk soy milk brand to its expanding organic food segment. WWAV shareholders will receive $56.25 per share in cash for each share owned, a 19% premium to Wednesday's closing price. Danone's Chief Executive Officer Faber said the acquisition will "allow us to double the size of our U.S. business and become the world leader in organic." DANOY finished slightly higher, while WWAV rallied.

Jobs data highlights economic calendar

Weekly initial jobless claims (chart) declined by 16,000 to 254,000 last week, versus the Bloomberg estimate of 270,000. The prior week's figure of 270,000 was downwardly revised to 268,000. The four-week moving average declined by 2,500 to 264,750, while continuing claims fell 44,000 to 2,124,000, north of the estimated level of 2,123,000.

The ADP Employment Change Report showed private sector payrolls rose by 172,000 jobs in June, above forecasts of 151,000, while May's gain of 173,000 jobs was revised lower to a 168,000 rise. Today’s ADP data, which does not include government hiring and firing, comes ahead of tomorrow's broader June nonfarm payroll report, expected to show an increase of 180,000 jobs, while private sector payrolls are expected to rise 170,000 (economic calendar). The unemployment rate is forecasted to tick higher to 4.8% from 4.7% and average hourly earnings are projected to rise 0.2% month-over-month (m/m).

In the final hour of trading tomorrow, we will also receive the latest consumer credit report, which is expected to show consumer borrowing for the month of May expanded by a level of $16.0 billion, after increasing by $13.4 billion in April.

Treasuries were mostly lower, with the yield on the 2-year note increasing 1 basis point (bp) to .059% and the yield on the 10-year note gaining 2 bps to 1.39%, while the yield on the 30-year bond was nearly unchanged at 2.14%. Bond yields have come under pressure as of late, falling to record lows as the global markets continue to grapple with the impact of the U.K. Brexit vote, and Schwab's Chief Fixed Income Strategist, Kathy Jones offers analysis in her recent article titled, Brexit: What Does It Mean for the Bond Market?, at www.schwab.com/marketinsight. Follow Kathy on Twitter: @kathyjones. Also, for more on the Brexit fallout, see the latest Schwab Sector Views: Sector Impact of Brexitfrom Schwab Director of Market and Sector Analysis, Brad Sorensen, CFA, at www.schwab.com/marktetinsight, and follow Schwab on Twitter: @schwabresearch.

Europe rebounds from three-day fall, Asia mixed 

European equities finished higher, rebounding from a three-day drop, as optimism re-surfaced that central banks will be supportive in the wake of the U.K. Brexit vote, which has fueled risk aversion and global growth concerns, and after yesterday's minutes from the Fed's June meeting showed continued dovishness. Also, anxiety toward the Italian banking sector softened amid increased hopes that a resolution to aid the battered sector can be achieved. Moreover, the British pound recovered somewhat after falling to a 31-year low versus the U.S. dollar. For deeper analysis of the impact of the Brexit vote, see the Schwab Center for Financial Research's recent article, Brexit: What Investors Should Know, at www.schwab.com/marketinsight and be sure to check out the video from Schwab's Managing Director of Trading and Derivatives, Randy Frederick and Schwab's Chief Global Investment Strategist, Jeffrey Kleintop, CFA, titled Brexit Aftershock: When Will the Markets Calm Down?, at www.schwab.com/insights. Follow Randy and Jeff on Twitter: @randyafrederick and @jeffreykleintop.

Economic news in the region was mixed, with a better-than-expected read on U.K. industrial production being somewhat overshadowed by a surprising decline in production out of Germany, while France's trade deficit narrowed and housing prices in the U.K. rose above forecasts. The euro was lower versus the U.S. dollar, while bond yields in the region were higher.

Stocks in Asia finished mixed, with the angst surrounding the U.K. Brexit vote fallout easing somewhat, but the global growth concerns remained. The flight-to-safety continued to boost the yen, which fostered a decline for Japanese equities. Elsewhere, Australian securities managed gains despite Standard & Poor's lowering the nation's AAA-credit rating outlook to negative from stable, saying "the government's fiscal stance may no longer be compatible with the country's high level of indebtedness." The move follows last weekend's general elections that rendered inconclusive results. Mainland Chinese stocks were mostly flat, but securities trading in Hong Kong gained ground for the sixth-straight day. Meanwhile, South Korean stocks rose and Indian equities inched higher following yesterday's holiday.

The international economic docket for tomorrow will yield trade data from Japan and Germany, industrial and manufacturing production from France and labor costs and the trade balance from the U.K.