Intraday Market Update
Equities struggled in the overnight and pre-market sessions after a slew of major companies missed revenue estimates, including Goldman Sachs and Johnson and Johnson this morning and IBM and Texas Instruments after the bell yesterday. A larger than expected drop in housing starts exacerbated an opening gap lower in the major indexes but equities have shown resiliency and are well off of their lows. The tech heavy NASDAQ is now only off -0.20%, while the S&P 500 is getting a boost from commodity related stocks and has turned positive. IBM has lost over -$5 (or -4%) and is weighing on the DJIA, while TXN is off -3.25% and is dragging down tech stocks. Overseas, the Asia-Pacific region was mostly higher as the Shanghai Index gained +2.15% but the Nikkei 225 was lower by -1.15%. European markets were mostly lower with the exception of Spain which gained +1.32%.

In earnings, GS reported Q2 earnings of $2.75 which was well above estimates but revenues were a bit soft at $8.84 billion compared to estimates of $8.96 billion. Revenue at GS from a year ago was $13.76 billion so year over year revenue has declined -35%. Revenue from its largest revenue generator, trading and principal investments, declined -39%, investment banking revenue fell -36%, and asset-management and securities revenue fell -11%. Shares have recovered about +$5 from their lows and are in positive territory.

Dow member Johnson and Johnson reported Q2 earnings of $1.21 per share which was a penny above the estimates but revenues were also soft coming in at $15.3 billion compared to estimates of $15.6 billion. Revenues were flat year over year. Shares of JNJ are down -2.5%. In other pharma earnings reports Biogen Idec (BIIB) was in-line with expectations and raised its full year guidance, while Forest Labs (FRX) beat expectations and also raised guidance. BIIB is well off of its lows at about breakeven while FRX is struggling down -1.25%. United Health Group reported earnings of 99 cents per share compared to estimates of 75 cents but the stock is struggling, down -1% after being up +2% at the open.

Housing starts slowed again in June declining -5.0% after a -14.9% percent plunge in May which was revised down. The June annualized pace of 549,000 units was well short of estimates calling for 580,000 units and is down -5.8% on a y/y basis. This month's drop was primarily due to a -21.5% plunge in multi-family starts which follows a +4.3% gain in May. The single-family component slipped -0.7% after an -18.8% decrease the prior month.

A positive in the report was that building permits rose +2.1% m/m to an annual rate of 586,000 which was more than estimates which called for building permits of 575,000 units. However, the increase in permits was driven by a +20% increase in multi-family applications, while single-family permits fell -3.4% which is the lowest level since April 2009. After gapping lower on the report, the Dow Jones US Home Construction Index has rebounded and is now the best performing sector gaining +2.50% on the day so far.


Core Sector List:
Overall reading: 5 sectors advancing, 11 sectors declining
Strongest Sectors: Home Construction, Oil Services, Gold Miners
Weakest Sectors: Banks, Semiconductors, Broker Dealers

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