Intraday Market Update
US equities are under pressure on Monday after Friday's +25 point rally off of the lows in the S&P 500. Risk aversion is the theme of the day as European sovereign debt spreads continue to widen and the 10-year yield on US Treasuries is back below 2.6%. The S&P 500 has lost -6 points and the DJIA has lost -60 points. The Russell 2000 has shed -6 points, while the NASDAQ is off by -13 points. Volume is light ahead of Friday's employment report and the long Labor Day weekend. Crude oil is trending lower after big gains late last week. Gold is near breakeven while other commodities are gaining ground. Overseas, the Asia-Pacific region was sharply higher with most markets posting +1.50% gains or better. Most European markets were lower by about -0.50%.
Personal income rose +0.2% in July compared to estimates calling for a +0.3% increase, while personal spending was up +0.4% compared to estimates calling for a +0.3% rise. The savings rate moved lower to 5.9% after a downwardly revised 6.2% for June. Also, the PCE Price Index was up +1.5% y/y in July compared to estimates calling for a +1.4% increase. The core PCE Price Index, which excludes food and energy, was +0.1% higher m/m, while y/y core prices moved +1.4% higher, both inline with estimates. Treasury prices moved higher with yields moving lower after the report.
M&A news continues to make headlines as Dow member Intel announcing that it has reached an agreement to acquire the wireless solutions business of German chipmaker Infineon Technologies in an all cash transaction valued at approximately $1.4 billion. INTC said the wireless unit will operate as a standalone business and the acquisition expands its current Wi-Fi and 4G WiMAX offerings to include IFNNY 3G capabilities. INTC and IFNNY have lost -1.9% and -5% respectively.
Elsewhere, Genzyme confirmed its rejection of Sanofi's $69 per share bid and that helped boost the stock, despite Sanofi's pledge to proceed cautiously with any additional offer. Cogent, Inc (COGT) agreed to a +20% premium offer to be acquired by 3M (MMM). And 3PAR is off -3% as they await Dell's response to HPQ's latest offer at $30 per share in cash. Separately, HPQ announced that it has authorized an additional $10 billion share repurchase program, with it expecting to purchase at least $3 billion worth of shares in fiscal 4Q. HPQ is up +2.6% on the news.
President Obama is scheduled to comment about the economy momentarily which could move the markets this afternoon.
Core Sector List:
Overall reading: 3 sectors advancing, 17 sectors declining
Strongest Sectors: Natural Gas, Real Estate, Biotechnology
Weakest Sectors: Semiconductors, Broker Dealers, Banks, Retail
NOTE: I am having technical difficulties with my trading software and am unable to post charts.