Intraday Market Update
After Friday's big sell off equities opened higher this morning after some positive earnings news in the pre-market. But the bounce didn't last long after a disappointing homebuilder report indicated the weakest conditions since April 2009. All of the major US indexes are barely positive in early afternoon trading with the exception of the Russell 2000 which is about -0.40% lower. Gold is giving it up and is near a 2-month low at $1,180. Equities in China tacked on more than +2% but other markets in the Asia-Pacific region were mostly lower. European markets gave up afternoon gains and finished lower.

The National Association of Homebuilders housing market index fell to 14 in July which was down -2 points from June (revised -1 point lower) and down -8 points from its recovery high of 22 in May. The traffic component fell -3 points to 10 and is the weakest reading since March of 2009. Overall homebuilders are reporting the weakest conditions since April of 2009. The sector continues to report tight credit conditions and competition from foreclosures and distressed sales. The NAHB Chairman said "We continue to see a lull in home buying activity following the expiration of the federal home buyers tax credit program as many of the sales that would have occurred this summer were likely pulled forward to meet the program's deadline. Builders are reporting continuing hesitancy regarding home purchases due to uncertainty in the overall economy and job markets."

In earnings news, oil services name Haliburton (HAL) handily beat earnings estimates ($0.52 vs. $0.37e) and revenue targets in its Q2 report. Shares of HAL are up nearly +5% in early afternoon trading. Haliburton said the deepwater drilling suspension would cut about 5 to 8 cents per quarter off its earnings for the rest of FY11. On the conference call executives responded to the proposed drilling ban by saying they do not expect rigs that have already left the Gulf of Mexico to return anytime soon, if at all, and warned that international customers are reevaluating deepwater drilling projects which is causing delays. Toy maker Hasbro (HAS) reported Q2 earnings of 29 cents which was 5 cents above consensus estimate, however, revenues declined -7% (y/y) and missed estimates. Shares of HAS are lower by -1%.

Delta Air Lines reported Q2 results that were basically in line with expectations with a slight revenue miss. The soft revenue sent shares of the company down more than -10% in early trading but they have rebounded and are now down -3.4%. The company had positive comments about the airline sector saying that it is seeing strong improvements early in the economic recovery and that they anticipate double-digit revenue gains for the September quarter. Dow member Boeing (BA) reported that it has received an order from GE Aviation for 40 737 Dreamliners valued around $3 billion and that Dubai-based Emirates Airlines announced that it plans to order 30 Boeing 777-300ERs. BA is higher by +1.3%.


Core Sector List:
Overall reading: 9 sectors advancing, 7 sectors declining
Strongest Sectors: Semiconductors, Utilities, Internet
Weakest Sectors: Gold Miners, Home Construction, Banks

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