The bulls appear out of breath after yesterday's sprint higher. Stocks are languishing sideways as investors sift through very strong JPM earnings news in contrast to a meltdown in shares of CIT. In economic news the jobless numbers appear to be improving but the Philly Fed survey was disappointing. Profit taking in banks leave the sector as one of the worst under performers today. Meanwhile a drop in the U.S. dollar is not enough to lift crude oil, which is slowly drifting lower under $61.50 a barrel.

Asian markets were mixed. The big news today was China's second quarter GDP number. In the first quarter of 2009 China's economy grew 6.1%. This morning the National Bureau of Statistics reported that the economy grew 7.9% in the second quarter. A lot of the "growth" can be attributed to a huge four-trillion-yuan ($585 billion) government stimulus package. The Chinese Shanghai index lost 0.1%. The Hong Kong Hang Seng rose 0.5% and the Japanese NIKKEI gained 0.8% but both the Hang Seng and the NIKKEI were sliding lower into the closing bell. Across the world European markets continued to climb making this one of the best weeks all year. The English FTSE rose 0.3%. The German DAX gained 0.5%. The French CAC-40 rose 0.9% all thanks to strength in financials.

It was J.P.Morgan Chase's (JPM) earnings report this morning that fueled the strength in financials overseas. Unfortunately here in the states investors were selling the news. Wall Street analysts were expecting JPM to report a profit in the 4 to 5 cents a share range. The company smashed the estimate with a profit of 28 cents a share. Record revenues in the investment banking division helped offset growing losses in their consumer loans and mortgages. Management believes that the consumer will continue to struggle and loan losses will continue. Shares of JPM are down 1.3% near $35.75. The BKX banking index is off 1.1% and the BIX banking index is down 1.6%.

The CIT Group Inc. (CIT) story is also weighing on the financial sector. Evidently the company's rescue talks with government regulators broke down last night. Now it appears CIT is headed for Chapter 11 bankruptcy possibly as soon as tomorrow. CIT was hoping for additional bailout money but the Treasury department decided that CIT did not pose any systemic risk to the economy. Pundits are crying foul. The government has already given more than $2 billion in TARP funds to CIT. Part of the argument is that CIT serves the small business market and if the administration is so concerned about helping small businesses then why don't they help CIT. CIT management is desperately trying to raise $2 billion in funding overnight to buy time. Some of the analysts out there believe the company really needs $4 to $6 billion in funding to survive. The stock spiked lower and is trading under .50 a share for a 72% decline on the session.

Investors were also a little disappointed with today's economic data. The Federal Reserve's Philadelphia's economic index turned lower with a drop from -2.2 in June to -7.5 in July. Economists were expecting a pull back to -4.5. Readings under 0 signal a contracting economy. Yesterday we heard from the New York Fed, which saw an improvement. The weekly jobless data also showed improvement. Initial claims plunged 47,000 to 522,000, which was much better than expected. The continuing claims also dropped by more than 640,000 to 6.27 million. Yet the Labor Department said these numbers might be a little off as they are struggling to adjust for layoffs and shutdowns with the Chrysler and General Motors automotive plants. The big drop in the continuing claims might also reflect a large number of workers falling off the list as their unemployment benefits expire. Speaking of unemployment Harley Davidson (HOG) just reported earnings this morning and announced they would be laying off another 1,000 employees.

Corporate earnings will continue to take center stage. Tonight after the closing bell IBM and Google (GOOG) are due to report earnings. Analysts expect GOOG to report a profit of $5.09 a share and IBM to report a profit of $2.02 a share. Friday morning before the bell we'll get earnings from Bank of America (BAC) and Citigroup (C). Estimates for BAC are at 28-cents a share while estimates for C are at a loss of 31 cents. Tomorrow we'll see the latest building permits and housing starts data.

Currently the S&P 500 index is virtually flat with a loss of less than two points near 931. The NASDAQ composite is just above the flat line with a 3.5-point gain at 1866. The Dow Industrials are up less than five points at 8620. The small cap Russell 2000 is also hovering near zero at 515.

Let's take a quick look at charts for the major averages:

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Chart of the Russell 2000 index:

Scanning the play list I am not seeing a lot of movement, which is understandable given the market's sideways trade today. We have been stopped out of AGU, which broke resistance at $40.00. The fertilizer names are trading higher in reaction to news that VALE might bid for Mosaic (MOS). Shares of MOS gapped higher today and are trading up 11%. We have also been stopped out of UPS, which broke through technical resistance at its 200-dma.