Intraday Market Update
More positive earnings and raised guidance from DuPont helped lift equities in the pre-market, but a worse than expected July consumer confidence reading sparked broad based selling in early trading. The S&P 500 futures gapped +8 points higher but quickly sold off and closed the gap. The DJIA and S&P 500 are near breakeven to slightly lower. The NASDAQ and Russell 2000 have given up -0.65%. Commodities are under pressure with crude oil and gold down more than -2%. International markets were mostly higher with the exception of China's Shanghai Index which lost -0.51%.

In the pre-market the S&P/Case-Shiller Home Price Index was released which showed an increase in home prices of +4.61% y/y in May. This was above estimates calling for an increase of +3.85%. Month over month home prices were +0.47% higher compared to forecasts calling for a gain of +0.20%. 19 of the 20 cities showed price increases m/m, led by Minneapolis, Atlanta, Los Angeles and San Francisco, while Las Vegas was the lone decliner. This is the good news, however, there are concerns which should keep the enthusiasm in check. The homebuyer's tax credit that expired on April 30th had an impact on the reading, and the report warned that the recent gains in home prices are not likely to last. In addition, the new home sales surge in June was off of record lows and existing homes sales fell even with continued support from the homebuyer tax credit. Finally, May's pending home sales plunged -30% and estimates are calling for another -5% drop in June.

Robert Shiller, professor of economics at Yale and co-developer of the home price index, told Reuters that he does not know where home prices are headed and believes the economy may be on a precarious path. "For me a double dip is another recession before we've healed from this recession. The probability of that kind of double dip is more than 50%. I actually expect it," Shiller said.

Consumer confidence slipped to 50.4 in July from an upwardly revised 54.3 in June. Estimates called for a reading of 51.0. The latest decrease was led by a drop in expectations to 66.6 from 72.7 in June, while the present situation sub-index also declined to 26.1 from 26.8 in June. Worries about the employment picture and income prospects were weak components in the report, while buying plans picked up from depressed levels in other categories. Those planning to buy a car within 6 months rebounded to 4.5% from 4.1% in June. Those planning to buy a major appliance within 6 months jumped to 28.5 percent in July from 23.7% in June. However, those planning to purchase a house edged down to 1.9% from 2.0% in June.

In other economic news, the Richmond Fed Manufacturing Index deteriorated in July to 16 from 23 in June. The reading was better than estimates which called for a decline to 12. A reading above zero denotes expansion. One troubling point in the report is that optimism from manufacturers about their business prospects continued to decline compared to last month, most evident in shipments, new orders, capacity utilization, and capital expenditures.

In earnings news, Dow member DuPont crushed estimates and raised its 2010 guidance to $2.90-3.05 vs. $2.64e. On the conference call DuPont said global semiconductor consumption already exceeds pre-recession levels, citing that sales volumes and prices are up across the business. They said Asia was a standout in the region with Japan leading the pack, Europe lagging, the US doing slightly better, and expecting the growth rate in China to moderate in the second half of the year. DD is up over +3%. BP's quarterly results were terrible as expected and the company formally announced that it has replaced its CEO Tony Hayward with BP insider Robert Dudley. Dudley pledged to create a smaller, leaner, more focused company. Shares of BP are down -1.25% but off of their worst levels.

Elsewhere, auto parts maker AmerisourceBergen and engine maker Cummins both beat top and bottom line estimates, while also increasing 2010 guidance. ABC increased its share buyback program. ABC is down -4% while CMI was up nearly +6% but has since pared most of its gains and is up +1.85%. Railroad firm Kansas City Southern (KSU) is off nearly -6% despite beating estimates. Agricultural equipment maker AGCO also beat expectations and boosted its 2010 view, citing strength in Latin America. Engineering firm Fluor Corp (FLR) also beat estimates. AGCO higher by just shy of +1% while FLR has tacked on +2.7%.

Core Sector List:
Overall reading: 4 sectors advancing, 12 sectors declining
Strongest Sectors: Utilities, Banks, Internet
Weakest Sectors: Gold Miners, Retail, Oil Services


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