Intraday Market Update
US equities gapped higher at the open this morning after strong manufacturing data from around the globe helped futures gain ground in the overnight session. The strength continued in early action after the US ISM Manufacturing Index in October was better than expected led by a surge in new orders. The S&P 500 was up +12.50 points and traded all the way up to last Monday's 5 month high near 1,196, however, the sellers showed up after a disappointing report on personal income and spending sparked some profit taking. In early afternoon trading all of the indexes are well off of their highs look to be headed lower. Trading is likely to remain choppy ahead of the elections on Tuesday and FOMC monetary policy announcement on Wednesday. Gold has lost -$6 and is trading at $1,351 per ounce, while silver is near breakeven. Crude oil has gained +2.4% and continues to bounce around between $80.00 and $84.00. Copper has taken back Friday's losses and has gained +1.40%. Overseas, the Asia-Pacific region posted impressive gains led by a +2.52% gain in China and a +2.41% gain in Hong Kong. European markets were mostly lower.
The ISM Manufacturing Index jumped +2.5 points to 56.9 in October. Consensus estimates called far a reading of 54.5. There was broad based strength in some of the key sub-indices such as new orders, production, and employment. New orders surged nearly +8 points to 58.9 for the best reading since May. Production also posted its best reading since May, surging more than +6 points to 62.7. Employment rose more than +1 point to 57.7 which indicates hiring has not stopped inn the manufacturing sector.
The Personal Income and Outlays report showed the consumer sector weakened in September. Personal income fell -0.1% which follows a +0.4% up tick in August. Consensus expectations called for a gain of +0.3%. After a +0.2% rise in August, wages and salaries were unchanged in September, however, private sector wages and salaries managed a 0.1% gain, which follows a 0.5% jump in August. Even though personal income was lower spending still remained positive but missed consensus estimates. Personal spending rose +0.2% which follows a +0.5% jump in August. Estimates called for a reading of +0.4%. This report shows the consumer weakened in September, but the weakness was clearly centered around a drop in government unemployment benefits and wages and salaries.
Construction spending rebounded in September, despite the weak personal income and spending report. Construction spending gained +0.5% after falling -0.2% in August. Estimates called for a -0.5% decline so this was a surprise. On a y/y basis, overall construction outlays improved to -10.4% in September from -11.6% in August. Gains were seen in private residential spending and public spending, however, private non-residential spending declined.
In equities, Humana (HUM) crushed earnings on the bottom line but fell just short on revenue. The health insurer it had strong performance in both its government and commercial segments, saying "with the success of our one-to-one retail approach to membership growth solidly aligned with the continued expansion on Medicare and potential retail opportunities in the individual market, Humana faces the post reform future with confidence." HUM raised their full year EPS outlook but failed to offer FY11 guidance. Shares surged higher at the open but have fallen back to near breakeven. Shares of Corning (GLW) have gained +1.3% after reporting earnings that were mostly in-line with estimates. However, the company warned that it anticipates demand in the worldwide glass market to be flat to lower in Q4.
Merger Monday is living up to its reputation after several reports have made the rounds. Over the weekend reports indicated that BHP Billiton (BHP) may raise their $130 per share bid for Potash (POT) by as much as 10% if the Canadian government approves the company to takeover POT. M&T Bank announced that they were acquiring Wilmington Trust Corp. (WL) in a stock deal valued at approximately $351 million. Network security provider Fortinet (FTNT) has gained +15% after reports indicated that IBM was considering a deal. Healthcare service provider McKesson said it acquired US Oncology for $2.16 billion.
Core Sector List:
Overall reading: 11 sectors advancing, 9 sectors declining
Strongest Sectors: Coal Miners, Nat Gas, Oil, Real Estate
Weakest Sectors: Utilities, Semiconductors, Retail
S&P 500 - Daily and Hourly Charts:
Dow Jones - Daily and Hourly Charts:
NASDAQ - Daily and Hourly Charts:
Russell 2000 - Daily and Hourly Charts: