Intraday Market Update
Enthusiasm is rampant on Monday as global equities posted solid gains, while the S&P 500 is breaking out to fresh 4-month highs ahead of tomorrow's FOMC announcement on interest rates. Most analysts do not expect the Fed to announce formal quantitative easing programs, however, the language may hint at the resumption of large scale asset purchases as we head into the final quarter of the year. All of the major indexes have posted nearly +1% gains and are being led by the Russell 2000, which has surged +1.5% higher. The markets are consolidating near their highs as CNBC televised a town hall meeting on the economy with President Obama. Gold has gained +$3, while crude oil has bounced +3% off of its Friday lows. Overseas, equities in the Asia-Pacific region were mixed to mostly higher, while European markets posted solid gains after Moody's reaffirmed UK's top debt rating, citing progress of its austerity measures.

The National Association of Home Builders Housing Market Index was released this morning and it remains at severely depressed levels last seen in March 2009. The reading was unexpectedly flat at 13 compared to estimates calling for a rise to 14. And there are signs of deterioration as the buyer traffic index fell -1 point to 9. The report noted that the poor job market and the large number of foreclosed properties continues to depress builder confidence. Homebuilders in general said they "haven’t seen any reason for improved optimism in market conditions over the past month." Nonetheless, homebuilders have rallied on the news in part due to an earnings crush from Lennar that benefited from higher margins and tax benefits. Shares of LEN are up more than +8%, while many other homebuilders are up more than +3%. This is an important week for housing data with housing starts for August tomorrow, existing home sales on Thursday, and new home sales on Friday.

M&A activity continues to boost investor confidence. Dow member IBM has reached an agreement to buy data analytics firm Netezza (NZ) for $27 per share in cash, or about $1.7 billion. The deal is said to expand IBM's business analytics initiatives to help clients gain faster insights into their business data. NZ is up +12.50% on the news and has gained +83% since its 8/26 close. L-1 Identity Solutions (ID) is up +19% after they said they were being acquired by French conglomerate Safran for $12 per share in cash, or about $1.6 billion. Internet Brands (INET) has gained +44% after they announced private equity firm Hellman & Friedman is acquiring the company for $13.35 per share in cash, or about $640 million.

In earnings, Discover Financial Services (DFS) is up +3.4% after beating earnings estimates and posting revenues that were basically in-line with estimates, although revenues declined -8% y/y. Discover's loan loss provisions were flat q/q after posting solid declines over the last several quarters.

Core Sector List: Overall reading: 19 sectors advancing, 1 sectors declining
Strongest Sectors: Home Construction, Internet, Oil
Weakest Sectors: Semiconductors

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