Intraday Market Update
Global equities extended gains on Thursday on the heels of more favorable economic data after yesterday's +30 point rip higher in S&P 500. Here in the US equities are drifting higher after pending home sales unexpectedly rose and August same store sales reports were mostly positive. The favorable data is overshadowing a worse than expected increase in factory orders and a decline in Q2 non-farm productivity. Today's enthusiasm was tested when the US Coast Guard and Mariner Energy (ME) confirmed reports of an explosion on one of ME's oil and gas rigs off of the coast of Louisiana. An ME spokesperson later confirmed that all wells were shut down and there does not appear to be oil or gas spilling in the gulf. Oil Services stocks got hit hard on the news but have since recovered and are heading back higher. All of the major indexes are in positive territory being led by the tech heavy NASDAQ gaining more than +0.50%. The S&P 500 is not far behind, while the DJIA is about breakeven. Crude oil has recovered from its lows and is in positive territory, while gold has gained $4. Overseas, the Asia-Pacific region posted solid gains with most major markets gaining more than +1%. European markets recovered from early losses to finish flat to slightly higher.

This week's jobless claims fell -6,000 to 472,000 and were better than estimates calling for a reading of 475,000. Last week's claims were upwardly revised by +5,000 to 478,000. The 4 week moving average in claims declined by 2,500 to 485,500, marking the first improvement in 5 weeks. But this remains stubbornly high and is still only a smidge below last week's 4 week moving average, which was the highest level since last December. In the end, jobless claims were essentially flat compared to last week's reading which seems to count as a positive report these days.

There was good news for the housing sector this morning as the Pending Home Sales Index rose +5.2% in July, ending two months of post stimulus decline and may point to positive readings on existing home sales in August and September. Gains were posted in all regions, however, the National Association of Realtors warned that the housing sector faces a "long recovery" ahead.

Elsewhere, factory orders rose +0.1% m/m in July, which was slightly less than estimates calling for an increase of +0.2%. But in a favorable revision June's drop was revised from a -1.2% decline to a -0.6% decline. And July durable goods orders that were reported last week were also upwardly revised from a +0.3% rise to a +0.4% gain. However, non-defense capital goods ex-aircraft, which is considered to be a good measure of business spending, fell -7.2%, following a +3.6% gain in June. And last but not least, the final reading of Q2 non-farm productivity was revised to an annual -1.8% decline, which follows a -0.9% decrease seen in the preliminary report.

A slew of retailers reported August same store sales data this morning, and it was surprisingly strong. Many major retailers reported solid y/y growth in sales compared to last August. However, just like last month's report the better same store sales continue to come from aggressive discounting and are being compared to August 2009 when sales were extremely weak. Retail ETF's XRT and RTH are up +1.7% and +1.3%, respectively.

In equities, Burger King (BKC) has gained +50% in two days as the fast food chain announced that it has agreed to be acquired by private-equity firm 3G Capital for $24 per share in cash, or about $4 billion. Other restaurant names are ticking higher on continued M&A activity in the space. Hewlett-Packard Co. (HPQ) announced that it has increased its previous offer of $30 per share to $33 per share in cash to acquire all of the outstanding shares of 3PAR (PAR). PAR confirmed that it received the offer from HPQ and reiterated that HPQ's revised proposal constitutes a "superior proposal" to Dell's upwardly revised $32 per share offer that PAR just received late yesterday. Dell does not intend to increase its offer and PAR will pay Dell a $92 million termination fee.

Core Sector List: Overall reading: 16 sectors advancing, 4 sectors declining
Strongest Sectors: Home Construction, Gold Miners, Retail, Semi's
Weakest Sectors: Utilities, Insurance, Broker Dealers


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