The equity market steered through one of the weakest consumer confidence reports ever yesterday and ended with a modest gain.  The confidence headline did cause some knee-jerk selling interest, but the market bounced back in short order.

Our suspicion is that the bad confidence number was ultimately regarded as a good sign by those participants expecting a QE3 announcement at the September FOMC meeting.  That thought became a pivot point for the broader market, which coincidentally has been showing a positive bias since Congress began its recess on August 8.

The market's resilience presumably spurred some short covering that aided in the turnaround, which got an afternoon boost following the release of the FOMC Minutes from the August 9 meeting.

The fact that the market responded in the favorable manner that it did to the minutes was striking considering the minutes were largely a rehash of the main points made by Fed Chairman Bernanke in his Jackson Hole speech last Friday. 

There was more verbiage in the minutes regarding the policy options discussed by members, yet it was clear that there was division in the ranks regarding the proper policy path to follow.  Perhaps the downdraft in the closing minutes of yesterday's trade reflected a more careful deliberation that the minutes told us everything and nothing about the Fed's next move.

For the time being, the equity market appears predisposed to think additional stimulus is on the way.  It can take that position because it was clear in Mr. Bernanke's speech that the Fed will act if necessary.  Separately, it is also clear that President Obama next week is going to lay out a plan to jumpstart the economy and that job-creating initiatives will be the main component of that plan.

Of course, what the president says is only as stimulative as what Congress agrees to do, and the recent experience of the debt ceiling negotiations doesn't lend much confidence to the idea that the folks on Capitol Hill are going to be the most agreeable bunch.

We shall see soon enough.  Congress returns "to do the people's work" on September 5.

Right now, the equity market is poised to continue its "recess rally."  The S&P futures are 0.5% above fair value, drawing support from news that German Chancellor Merkel and her cabinet are advocating for the expanded capabilities of the European Financial Stability Fund as well as an ADP Employment Change report for August that fit the sellable bill of being better than feared.

According to ADP, private sector payrolls increased by 91,000 positions in August.  That was just under the Briefing.com consensus estimate of 100,000, but it was down nearly 17% from July.

Small business led the hiring, adding 58,000 positions while medium and large businesses added 30,000 and 3,000, respectively.  By sector, growth was skewed heavily to the services sector, which accounted for 80,000 hires while the goods-producing sector added 11,000 jobs.

The S&P futures added to their gains, which had been building throughout the morning in conjunction with healthy gains registered by many foreign markets, and particularly in Europe.

The Chicago PMI report for August (Briefing.com consensus 53.0; prior 58.8) and Factory Orders data for July (Briefing.com +1.8%; prior -0.8%) will be released at 9:45 a.m. ET and 10:00 a.m. ET.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.