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Durable goods orders stronger than expected

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Stock futures have reversed course and now trade higher and Treasuries saw sudden selling as YIELDS jerked higher after this morning's durable goods orders showed orders placed with U.S. factories registered the largest gain in months.

In July, total durable goods orders jumped 8.7%, marking the largest rise since a 9.2% gain in October 2001. July's increase was much larger that Wall Street economists were predicting (consensus was for a 1.5% gain) and a major reversal from June's revised lower -4.5% decline (June's initial was -4.1%). Excluding defense spending, durable goods rose 7.3%, which is the largest gain in history.

Demand for aircraft, which can swing the report in both directions from month to month, led to a more-than-20 percent rise in transportation orders. But the report showed strength outside the aircraft sector as well. A key measure within the report showed non-defense capital goods soaring a record 13.5% last month and excluding aircraft, the subset of the data rose a sizeable 8.1%, which is the largest jump since January 1997.

Salomon Smith Barney raises estimates for asset managers

In a morning call, Salomon Smith Barney is raising estimates and price targets for select asset managers in order to account for the strong equity market rebound from the recent low on July 23. Top pick are FII and AC. Others in the group that Salomon Smith Barney is raising estimates for include (BEN, BLK, EV, GBL, LM, NEU, SV, TROW, WDR, WPL).

IBM widens lead in server market

Reuters is reporting this morning that IBM (NYSE:IBM) $79.42 has widened its market share lead to 29.6% in a shrinking server market in Q2, while Sun Microsystems (NASDAQ:SUNW) $4.40 showed the fastest rise in share to 18.4% from 16.6%, according to the latest survey from Gartner. Dell Computer (NASDAQ:DELL) $27.88 increased its share to 7.2% from 6.5%, while Hewlett Packard (NYSE:HPQ) $14.85 lost share, going to 24.7% from 27.4%.

Stock futures turn higher

As mentioned earlier, stock futures have rebounded from their morning lows and currently has S&P futures (sp02u) trading up 5.5 points at 953, NASDAQ futures (nd02u) are higher by 8 points at 1,024.50 and Dow futures are higher by 65 points at 8,975.

Fair value for the S&P 500 today is $0.30. That price will not change during the session. HL Camp & Company has their computers set for program buying at $2.00 and set for program selling at $-1.20. Fair value for the NASDAQ-100 today is $1.62.

Jeff Bailey
Senior Market Technician
Option Investor

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