Intraday Market Update
US equity markets opened slightly positive this morning and are now surging higher, trading near their session highs. The -15 point sell off in the S&P 500 during the last 45 minutes of trading yesterday afternoon has been erased. In early afternoon trading the SPX is positive by +15 points to 1086 while the DJIA has gained +120 points to 10,145. The NASDAQ and Russell 2000 have also erased the losses from yesterday's late day sell off. All of the major indexes are higher by more than +1.25%.
Equities have stabilized as the fierce selling in the oil services names has subsided, at least for now. After being the worst performing sector yesterday and declining -7.5% the oil services sector is the best performing sector today, rising +3.50%. Anadarko Petroleum (APC) is up +3% on the day but the stock is down -20% since its highs on Friday. Transocean (RIG) is down another -4.50% as BP continues to struggle to cap the Horizon well in the Gulf. Shares of BP are up +2.0%. Other sectors performing well include home construction and biotechnology, both rising about +2.0% on the day.
In economic news, the pending home sales index, based on contracts signed in April, surged +6% to 110.9. This follows an upward revision in March to +7.1%. Year over year the index is up +22.4%. This is the third straight month of gains in the index, which leads existing home sales by a month or two. Pending home sales were clearly boosted by government tax credits for home buyers who had to sign contracts by the end of April and close by the end of June to be eligible for the tax credit. Pending home sales are measured at the time of contract signing which is different than existing home sales which are counted at contract closing. Therefore, existing home sales are also likely to increase in next month's report.
Challenger's job cut report held at pre-recession levels of 38,810 in May compared 111,182 in May 2009. The report said that state and local government job cuts is a key weakness as they are being hit with budget gaps. This report supports expectations for payroll gains in Friday's employment report. The Labor Department's employment report is forecast to show a jump in payrolls of 540,000, boosted by government hiring of temporary census workers. The ADP Employment report to be released tomorrow is forecast to show private sector payrolls increased by 70,000 in May which would be the most since December 2007.
The euro and US dollar have been in the news after reports surfaced that Iran's central bank has began the first of three phases to divest its 45 billion euros of foreign exchange reserves. According to the state run Jaam-e-Jam newspaper, the bank will sell euros for US dollars and gold in three stages and will be completed by September 22. This marks a reversal in the country's previously stated policy of moving its reserves away from US dollars.
In equities, shares of DivX, Inc. (DIVX) have gained +25% after getting a buyout offer from Sonic Solutions. Gerdau Ameristeel (GNA) has gained more than +55% after their parent company, Gerdau of Brazil, offered to acquire the remaining stake that it did not already own. Canadian Solar (CSIQ) has lost -14% after providing Q3 shipment guidance and disclosing an investigation by the Board's audit committee. Shares of Local.com (LOCM) has gained +10% after raising guidance. Local.com posted a profit for the first time ever in its Q1 earnings report and followed that up with another profit in its Q2 earnings report.
Commodities are mixed with front month crude higher by +1.45% and natural gas higher by almost +3.0%. Gold is slightly lower (-0.30%) but off of its lows. Silver is lower by -1.27% and copper is also lower by -0.75%.
International markets were mixed on Wednesday. In the Asia-Pacific region Japan was the biggest loser (-1.12%) on the heels of an abrupt resignation of its Prime Minister Hatoyama just one day after he vowed to stay in office. Australia was off -0.73% while China and Hong Kong trading was relatively flat. European markets recovered late in the day and relatively flat to slightly lower.
Core Sector List:
Overall reading: 16 sectors advancing, 0 sectors advancing.
Strongest Sectors: Oil Services, Biotechnology, Home Construction
Weakest Sectors: Retail, Utilities
S&P 500 - Daily and 30-minute Intraday Charts:
Dow Jones - Daily and 30-minute Intraday Charts:
NASDAQ - Daily and 30-minute Intraday Charts:
Russell 2000 - Daily and 30-minute Intraday Charts: