Intraday Market Update
The S&P 500 futures gapped -12 points lower this morning on the heels of weak markets overseas and after US existing home sales in July fell to their worst level in 15 years. Adding to the bearish mood were comments from leading analysts at Morgan Stanley and Goldman Sachs about the state of the economy, while the Irish building material company CRH Plc lowered its guidance citing a worse than expected spending outlook in the US from both commercial and state and local government projects. The S&P 500 reached a low of 1,046 (-21 points) in early trading but has since bounced nearly +10 points. All of the major indexes are off of their lows and trading near the middle of their daily ranges. The DJIA briefly dipped below 10,000 before bouncing back. Gold is nearly +$20 off of its lows, while crude has lost -2%. Treasury yields have come off of their lowest levels but remain supported by a flight to safety. Overseas, European markets were sharply lower with most losing more than -1.50%, while the only positive market in the Asia-Pacific region was China squeaking out a +0.40% gain.

If you have been reading commentary in our newsletters we have been expecting terrible existing home sales data, but today's report couldn't get much worse. Existing home sales fell -27.2% in July to an annual rate of 3.83 million, which is the lowest level in 15 years. The 3.83 million rate compares with estimates calling for 4.65 million. This is a significant miss and adding insult to injury were the supply numbers. Supply at the current sales rate surged to 12.5 months from June's already bloated 8.9 months. This is the worst reading in 11 years. Prices showed little deterioration but today's data is likely to change that in the coming months.

In other economic news, the Richmond Fed Manufacturing Index fell to 11 in August from 16 in July. This was above estimates calling for a reading of 8, which remains above the zero and signals expansion in the region, albeit at a declining pace.

In the pre-market, there were some bearish comments from leading analysts. Goldman Sachs Chief Economist Jan Hatzius said substantial downward GDP revisions for the US would arrive soon, but he added that the odds of the economy returning to a technical recession are low. Meanwhile, Morgan Stanley's Steven Roach warned that the US is more like Japan than we want to admit.

Core Sector List:
Overall reading: 3 sectors advancing, 17 sectors declining
Strongest Sectors: Home Construction, Utilities, Oil Services
Weakest Sectors: Coal, Internet, Banks

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