Intraday Market Update
The S&P 500 sold off -6 points in early trading before bouncing back +11 points and into positive territory in late morning trading, despite a miss in the Dallas national manufacturing index and unenthusiastic May consumer spending data. The Dallas reading fell to its lowest level since October of 2009, while US households increased their personal savings rate up to 4% in May. Traders are also digesting the G20 meeting of world leaders this past weekend in which they pledged to cut deficits by 2013. Just about every country except the US is calling for stricter austerity measures to reign in sovereign budgets compared to the US argument of more stimulus. Investors are trading with caution ahead of Friday's employment report and there is a wide range of non-farm payroll estimates from -165,000 to +435,000. Wednesday's ADP employment report and Thursday's jobless claims report should give us some clues to prepare for Friday. All of the major US equity indexes are about breakeven on day. Overseas, Asia finished mixed while Europe was sharply higher.
In equities news is light. Apple announced favorable iPhone 4 sales and called it their best product launch in history, selling 1.7 million units through June 26th. AAPL is higher by +0.40%. Aflac (AFL) is +2.90% higher, but well off of its highs, after the firm reported they sold their holdings in Greek sovereign debt. The WSJ reported that the SEC is investigating KB Home over its joint venture accounting practices for depreciating home and land prices, and claims the investigation may have implications across the industry. KBH is higher by +1.80%, however the stock has lost -7.2% after a disappointing earnings report after the close on Thursday.
Goldman Sachs analysts raised their 2010 global demand for solar power which was good for a pop in the sector, however, most names have fallen back, including the EFT TAN which is lower by -0.43%. Offshore driller Noble Corp (NE) announced that it would acquire Frontier Drilling for more than $2 billion in a deal that would add six drill ships to its inventory. NE is up +4%.
On Friday negotiators finished their work on the FinReg reform bill which provided a framework for certainty for the banks, however, on Monday that certainty is now in question. The death of Robert Byrd (D-WV) early this morning and comments from Scott Brown (R- Mass) are causing the Obama administration unexpected challenges. Brown said that he was surprised by a nearly $20 billion fee that was included in the final bill in order to force the nation's largest banks to pay for the costs of implementing the new legislation. Brown called it a tax, and said its inclusion might cost his vote. Brown's statements and Byrd's death are shifting focus to two Democrats who voted against the initial version of bill because it was not tough enough regulation on Wall Street firms.
Commodities are under pressure as the US dollar is gaining strength. Treasuries are near their highs from May 2009 and clearly shows the lack of risk taking by investors.
Core Sector List:
Overall reading: 5 sectors advancing, 11 sectors declining
Strongest Sectors: Utilities, Semiconductors, Healthcare
Weakest Sectors: Gold Miners, Retail, Broker Dealers
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