Intraday Market Update
In the overnight session the S&P 500 futures drifted lower and briefly undercut Tuesday's lows. But the losses were erased after a better than expected ADP employment report provoked enthusiasm about private sector job growth ahead of Friday's non-farm payroll report. After the bell a better than expected ISM non-manufacturing report caused a spike in equities that was quickly sold into. News out of China exacerbated the selling after headlines indicated bank stress tests will be required to assume up to a 60% decline in home prices for some cities. A prior stress test was operated with the assumption of a 30% decline in home prices. This seemed to be a knee jerk reaction and equities have recovered. In early morning trading all of the major indexes are near breakeven and are struggling to hold onto early gains. Overseas, in the Asia-Pacific region Japan's Nikkei Index lost -2.11% while the remainder of the region was mixed with no big winners or losers. European markets recovered from early losses and are mostly near the flat line.

This morning ADP reported that that the US added +42,000 jobs to private payrolls in July. This is higher than estimates calling for +25,000 jobs and it was higher than the +13,000 jobs the they said were added to private payrolls in June. Services jobs rose +63,000, while goods producing jobs slipped -21,000.

Meanwhile, the Challenger Job Cut Report said private employers in July announced plans to cut 42,000 workers, which was +6% higher than the estimated cut in June. It was the third monthly rise in projected job cuts since the bottom in April. However, John A. Challenger, chief executive officer of Challenger, Gray & Christmas said "It is true that job cuts have increased in each of the past three months. However, the increases are so slight and the monthly totals so low when compared to recent years, that the trend in no way suggests a reversal of the significant slowdown in job-cut activity witnessed over the past year."

The ISM's non-manufacturing index rose to 54.3 in July vs. 53.8 in June. New orders rose nearly +2.5 points to 56.7 while employment rose more than +1 point to 50.9 for its best reading of the recovery. Other details were mixed. Business activity slipped lower to 57.4 which is still strong. Export orders jumped +4 points to 52.0 and backlogs and inventories rose but at a slower rate than July. This report is a big positive given the string of recent reports showing gradual slowing.

In equities, Priceline (PCLN) has gained more than +$50 (or +21%) after they crushed earnings and raised their guidance. Barnes and Noble (BKS) is up +22% after they announced they intend to evaluate "strategic alternatives," including a possible sale of the company in order to increase stockholder value.

Core Sector List:
Overall reading: 11 sectors advancing, 5 sectors declining
Strongest Sectors: Gold Miners, Retail, Internet
Weakest Sectors: Semi's, Pharmaceuticals, Software

Commodities/Currencies:

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