Intraday Market Update
US equities opened slightly higher this morning but quickly turned lower extending yesterday's decline. An unexpected downward revision to Q1 GDP did not help investor sentiment in early trading as the S&P 500 was down -7 points. However, equities shrugged off the news and have recovered from their lows after an unexpected upward revision to the final University of Michigan Consumer Sentiment Index and strength in financial stocks after the US Congress conference committee completed negotiations on the FinReg reform bill. Despite the added regulation, the uncertainty of the process has been removed which is giving banks a boost. Goldman Sachs and Citigroup are +4% higher while most other large banks are +2% higher. The S&P 500 has rallied +15 points from its lows and is now positive by +8 points (+0.75%) as the index broke through its downtrend line from Monday. The Russell 2000 has gained +1.77%, while DJIA is lagging behind, up only +0.30%. The only sector in the red is the homebuilders after a disappointing report from KB Homes.
Greece's problems continue as CDS spreads on its debt hit new highs again and chatter is circulating that the country may sell various islands in a capital raising effort. Most major international markets traded lower on Friday.
Earnings reports are sending a mixed message, with Oracle beating estimates, while RIMM missed revenue and KB Home announced a larger than expected loss. RIMM has lost -10% and is trading below a key support level of $54. The next major levels of support are $48 and $40. ORCL is up +4% while KBH is down nearly -8%. KBH is hanging onto a key support level of $11 with the next major level of support down near $8.
Final GDP for Q1 turned out to be significantly less than expected. GDP was revised down to an annualized growth rate of 2.7% compared to the prior estimate of 3.0% and the initial estimate of 3.2%. Estimates called for an unrevised growth rate of 3.0%. Personal consumption gained +3.0% which was below estimates of 3.5%. Real final sales to domestic purchasers were revised down to 1.6% from 2.0% while final sales of domestic product, which excludes changes in inventory, were revised down to 0.8% versus the prior estimate of 1.4%.
Consumer sentiment has been increasing for the past few months and today's report increased more than initially reported in the preliminary release, rising from an initial reading of 75.5 to 76.0 in June. Expectations were for an unchanged reading. The upward revision came as the current economic conditions component increased from 82.9 to 85.6 in the preliminary report which offset a decline in the economic outlook component from 70.7 to 69.8.Today's 76.0 level is the highest level since January 2008.
The US dollar is weak today which is giving commodities a boost. The greenback is nearing a critical support level of $85.36 which is also near its 50-day SMA. Crude oil has gained +3% as a tropical disturbance is brewing in the western Caribbean. It appears some short stops were also hit above $77.60 and if crude closes at current levels it will be the highest daily close since May 6. Copper is at its highest levels in nearly a month.
Core Sector List:
Overall reading: 15 sectors advancing, 1 sector declining
Strongest Sectors: Gold Miners, Banks, Oil Services
Weakest Sectors: Homebuilders, Pharmaceuticals, Oil
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: