Intraday Market Update
Here we go again. The S&P 500 Futures traded +20 points off of its lows overnight and in the pre market causing another significant gap higher this morning in the US equity markets. The S&P 500 surged above yesterday's highs reaching 1,083 before pulling back -10 points and bouncing. The index is trading in a 10 point range between 1,073 and 1,083, but the bounces are being sold into so far. All of the major indexes are higher by about +2% in early afternoon trading but they have shown vulnerability and could rollover if the opening range is violated. Goldman Sachs is down over -3.00% as more charges against their CDO business are being investigated. The SEC is conducting a preliminary investigation into a $2 billion Hudson Mezzanine Funding CDO deal that was packaged and sold in 2006. Also the Australian hedge fund Basis Yield Alpha has sued the firm over the Timberwolf CDO. Goldman's reply is that the lawsuit is a misguided attempt to shift losses to Goldman.

Yesterday afternoon's sell off was erased this morning as strong economic data out of Asia is bringing risk appetite back to the table. Chinese officials confirmed that exports grew at nearly +50% last month which was the biggest rise seen in the country's exports in six years, bolstering confidence that the world's fastest growing major economy will continue to fuel global growth. Japan's economy also grew at an annualized +5% rate in the first quarter. Meanwhile in Europe, the ECB planned to extend offerings of unlimited cash and keep buying government bonds to fight the sovereign debt crisis, and well received bond auctions in Spain and Italy, all played key roles in reviving risk appetite in the pre market. The BoE and ECB kept interest rates unchanged.

Economic data in the US also seems to be boosting investor sentiment as the weekly continuing jobless claims fell sharply (-255,000) to their lowest level since 2008. This signals employers are hiring but it also may have something to do with expiring unemployment benefits. However, initial jobless claims were not so rosy as the number of workers filing for benefits for the first time increased to 456,000 compared to estimates of 448,000. The prior week's initial claims were also revised +6,000 higher and now the four week average is at its highest level in three months. RealtyTrac reported that the US foreclosure rate continued to decline in May.

Shares of BP fell -16% yesterday in the US and the London listed shares of BP lead the FTSE to sharp declines in early trading before the index recovered in the afternoon. Shares of BP in the US have reversed today and are up +10%. Some of the stock's strength is being attributed to takeover rumors. BP stated overnight that it did not understand why its shares fell as much as they did and reiterated the firm had ample resources to deal with the Gulf oil spill. In an investor note from analysts at Bank of America Merrill Lynch they agreed with the company by indicating that BP has the flexibility to cover the costs of the disaster and maintained their buy rating. According to BP, the cost of the response to date has been $1.43 billion. Shares of BP's partner in the well, Anadarko Petroleum, are up +8%. The oil services sector is up +4.3% and is the best performing sector on our core sector list.

In equities Del Monte Foods is up +7% after they blew away earnings expectations and offered strong 2011 guidance. The company also raised its dividend by 80% to 9 cents from 5 cents and authorized a share buyback program of $350 million (approximately 12% of its market cap). Men's Warehouse also crushed earnings and the stock is up +15%. More troubling news is being heard in certain areas of the tech sector. DigiTimes reports that some DRAM module makers have reported revenue declines in May driven by weak demand related to the debt crisis in Europe.

Commodities/Currencies:
Front month crude continues its rally while natural gas is pausing after a larger than expected build in weekly inventories. Gold continues to back off as risk appetite is back. Silver and copper are also higher. the US dollar is also lower which is driving risk appetite.

International Markets:
The Asia-Pacific markets were all higher with the exception of China which lost -0.82%. Winners in the region included Japan (+1.10%) and Australia (+1.14%). All major European markets were higher including Spain (+3.72%), France (+2.03%), Germany (+1.20%) and London (+0.92%). Core Sector List:
Overall reading: 16 sectors advancing, 0 sectors declining.
Strongest Sectors: Oil Services, Home Construction, Oil
Weakest Sectors: None

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