Intraday Market Update
US Equities have tacked on gains after yesterday morning's spring board higher as the market digests the results of the European Bank stress tests. The Russell 2000 is leading the way higher surging +2% while the other major indexes have just spiked higher. The DJIA has gained +100 points and the S&P 500 has gained +9 points and is peeking its head above the July 13th highs near 1,100. All of the indexes have now broken their primary downtrend lines from the April highs. On the positive side of the earnings ledger were reports from MSFT American Express, Ford, and McDonald's all beating estimates, but on the negative side Dow member Verizon fell short on revenue and Amazon missed on the bottom line in a big way. Overseas, Asia-Pacific markets were higher led by a +2.28% gain in The Nikkei 225 index, while most European markets were slightly higher. There is no US economic data to report.

The fireworks started at noon when the European bank stress tests were released. The S&P 500 traded in back and forth in an 8 point range as the results were released over a 15 minute period. Seven out of the 91 banks across the pond failed the test. One German, one Greek, and five Spanish banks failed. Spain had the most banks tested with 22, followed by Germany with 13, and Greece and Italy with 5. All other countries had 4 or less banks tested. Top banks in France, Portugal, Italy, Ireland, Sweden, Finland, and the UK all passed. There will be much debate on whether these tests were true tests or whether they were open book quizzes and I'll leave that up to the analysts. However, the bottom line is that regulators probably made the tests just stringent enough so that a few banks failed making it seem like a relevant exercise, when in fact it was not.

In earnings, Dow members AXP, MCD, and VZ all reported earnings before the bell. AXP beat estimates and showed improvement in loss provisions. The firm warned that they remain cautious on the economy but said they are seeing broad-based growth in consumer spending. MCD's report was slightly better than estimates, while VZ missed revenue and subscriber additions declined from last quarter. Nonetheless, shares of VZ are up +3%, AXP is up nearly +2%, and MCD is down nearly -3%. AMZN gapped more than -15% after they missed bottom line estimates ($0.45 v $0.54) and offered soft guidance, however, the stock has pared most of those losses and is down -3.3%.

A slew of industrial names reported mixed results. Ford (F +4%) handily beat on the top and bottom line. The CEO said the company continues to take market share in the US and said their 2011 results would be even better than 2010. Honeywell (HON +1.5%) was more or less in line with estimates. Their CEO said the company believes the recovery is happening as seen by better demand in their short term and long term business cycles. Ingersoll-Rand (IR) was down -5% but has pared all of the losses after they beat estimates but offered a soft full year outlook. Johnson Controls (JCI -3%) missed bottom line estimates by 1 penny and guided below full year estimates.

The US Treasury announced plans to sell an additional 1.5 billion shares of Citigroup to begin immediately. The US Treasury currently owns 5.1 billion shares and has already received approx $10.5 billion in proceeds from the prior sale of 2.6 billion shares. Shares of C are down 7 cents on the news, or -1.5%.

Core Sector List:
Overall reading: 12 sectors advancing, 4 sectors declining
Strongest Sectors: Home Construction, Transportation, Broker Dealers
Weakest Sectors: Pharmaceuticals, Oil Services, Utilities


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