Market Overview

Previewing & Trading Tomorrow's Important Economic Reports


Tomorrow is a major day in terms of economic reports, with the largest report being the May Nonfarm Payroll report due out before the start of trading.

Previewing the various economic reports will give traders a good idea on how to play them, whether it be long or short.

At 8:30 a.m., the Bureau of Labor Statistics will release its monthly jobs report. Economists are expecting 169,000 jobs to be created for the month of May, but given the weak report we saw yesterday from ADP, this may be unattainable. ADP reported that just 38,000 jobs were created during the month of May, well short of the 175,000 economists were looking for. After yesterdays miss, major investment banks ratcheted down their expectations for job creation last month, with some cutting estimates below 100,000. Goldman Sachs, Credit Suisse, Morgan Stanley and Deutsche Bank were among the banks who slashed estimates.

Included in the Nonfarm payroll will be the unemployment rate, hourly earnings, and average workweek. The unemployment rate is expected to hold steady at 9.0%, average hourly earnings are expected to tick up to 0.2%, and the average work week is expected to remain steady at 34.3 hours.

At 10:00 a.m., the ISM Services for May is going to be released. It is expected to tick up from April, going from 52.8 to 53.3.

If the nonfarm payrolls number manages to beat estimates, then all things risky should move higher on this number, as there has been a lot of fear going into the number, based on weak economic reports. High beta names to consider are Caterpillar (NYSE: CAT), Deere & Co (NYSE: DE) and Apple (NASDAQ: AAPL). If the ISM Services report is better than expected, service names like Target (NYSE: TGT), Saks (NYSE: SKS) and others should benefit as well. Conversely if these reports miss estimates, we can expect to continue to see the downtrend continue, and traders may want to take a look at the ProShares Ultra Short S&P 500 ETF (NYSE: SDS), and the ProShares UltraShort QQQ ETF (NYSE: QID)

Posted-In: Credit Suisse Deutsche BankLong Ideas Short Ideas Specialty ETFs Economics Trading Ideas ETFs Best of Benzinga


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