The major stock indexes spiraled downward late yesterday, pushing the Dow over 200 points lower than when we posted our report yesterday morning. We saw the same pattern in the Nasdaq and other indexes. As stocks moved lower, funds shifted into bonds driving yields lower. That caused many lenders to issue intra-day improvements to mortgage rates of approximately .125 - .250 of a discount point. Unfortunately, this morning’s bond losses neutralize those gains from yesterday afternoon. December's Factory Orders was this morning’s only relevant economic data. The Commerce Department announced at 10:00 AM ET that new orders at U.S. factories for durable and non-durable goods fell 1.5% in December. This was fairly close to the 1.7% decline that was forecasted. Since this was only a moderately important report that is somewhat aged at this point, there has been little reaction to the news in both the financial and mortgage markets. Tomorrow doesn’t have any governmental or other reports that are traditionally important to mortgage rates. However, the ADP Employment report is set for release at 8:15 AM ET tomorrow morning, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs of the company’s clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and also, as we saw last month, is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that will be posted Friday. Still, because we saw a noticeable reaction to the report last month, it is worth watching. Especially, since we have seen so much volatility in the markets recently. Analysts are expecting to see an increase of 178,000 new jobs. By theory, a larger increase would be negative news for bonds and mortgage rates because Friday’s report will also show stronger results. On the other hand, a much weaker payroll number is believed (again- by theory only) to mean the government report will be soft also.