Intraday Market Update
US equities have erased most of yesterday's losses as Europe's recurring sovereign debt issues have cooled off after a successful bond auction in Portugal. It was just yesterday that credit spreads on Irish and Portuguese debt hit fresh all time highs against German bonds, while the German/Greek spreads increased to their highest levels since May. These worries have been alleviated for now as European equities recovered from early losses to post solid gains across the board on Wednesday. Meanwhile, the successful auction also sparked a +15 point rally in the S&P 500 futures which began at about 6:AM EST. All of the major US indexes are now posting solid gains, being led by the NASDAQ 100 gaining +1.20%, despite UBS cutting their rating on tech bellwethers Intel and HPQ. The Russell 2000 has gained more than +0.6%, while the S&P 500 and DJIA are about +0.50%. Crude oil has gained +1.40% while gold is about breakeven. Equity markets in the Asia-Pacific region were all lower led by -2.18% and -1.46% declines in Japan and Honk Kong. China's Shanghai Index lost -0.11%.

The economic calendar is relatively light as traders are focused on the release of the Federal Reserve's Beige Book at 2:PM EST. This morning the weekly Mortgage Bankers Association purchase applications index rose +6.3% which marks its highest level since May and the third consecutive weekly gain. However, the index is still down nearly -40% y/y and is also still well below levels seen prior to the April expiration of second round housing stimulus. Although the refinance portion of the index slipped -3.1%, marking its first decline in six weeks, it is still very high at 82% of total mortgage applications. Nonetheless, the increase in purchase applications over the past three weeks coupled with last week's rise in the pending home sales index raises hopes that the housing sector is at least trying to find a post-stimulus bottom. The average 30-year mortgage rate rose +7 bps in to 4.50%.

Elsewhere, the ICSC-Goldman Store Sales index fell -0.4% last week which pulls down the y/y rate to +1.8% and is the lowest reading since May. The report cites hot weather curbing demand for fall apparel. On the positive side, the report sees the y/y rate rising to +3.0% for the full month of September in what would be a continuation of the upward trend.

In equity news, semi name Altera (ALTR) has gained +2.25% after raising its Q3 revenue guidance to double digit growth from high single digit growth. The company said that the telecom and wireless vertical is on track to be the fastest growing portion of its business driven in large part by 3G wireless. However, competitor Silicon Labs (SLAB) has lost -7.50% after cutting its Q3 earnings and revenue guidance, citing broad weakness in demand from consumer markets. In earnings, Navistar (NAV) beat earnings estimates in its Q3 report, but revenue was a bit light. On the conference call, the company's CEO said he expects orders in Q1 of 2011 to be lower y/y and Q2 orders to be higher y/y. NAV has lost -7.5%.

In M&A news, the bidding for Potash Corp is heating up. The firm has once again said BHP's offer undervalues the firm, and also stated that third party bidders are expressing interest. Reports overnight indicated that Sinochem could unite with CNOOC to bid for the firm, with rumors of an offer near $185 per share.

Core Sector List: Overall reading: 16 sectors advancing, 4 sectors declining
Strongest Sectors: Transportation, Banks, Coal, Biotechnology, Oil
Weakest Sectors: Semi's, Gold, Utilities, Software


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