Intraday Market Update
Global equity advances in Asia and Europe overnight set a positive tone in the US pre-market this morning, and a better than expected jobless claims report, coupled with a narrower than expected trade balance, sent the S&P 500 futures to fresh monthly highs. All of the major indexes gapped higher at the open but have since traded lower and are struggling to hold onto gains. The Russell 2000 has closed its gap higher, while the S&P 500, DJIA, and NASDAQ remain slightly positive. The selling began in earnest at about 12:45 EST after reports surfaced that Germany's Deutsche Bank may need to raise money to meet regulatory capital requirements. Today's best performing sectors in the US are financials as banks and broker dealers have gained better than +1%, although they are well off of their morning highs. Crude oil has sold off more than -2% from its highs and is in the red, while gold has lost -$8, but is +$6 off of its lows. Overseas, the Shanghai Index lost -1.44% but other markets in the Asia-Pacific posted solid gains. Most European markets were up roughly +1% as the reoccurring sovereign debt concerns are suddenly abating, but one has to wonder how the region will react tomorrow to the Deutsche Bank news.

Initial jobless claims numbers registered a decline of -27,000 for a reading of 451,000 vs. 478,000 last week. Estimates called for a reading of 470,000. Today's 451,000 reading is the lowest level since July so the report was a nice surprise for the bulls. In addition, the four week moving average dropped by 9,250 to 477,750, while continuing claims slid by 2,000 to 4,478,000. However, the Labor Department told Market News International that nine states had to be estimated due to delays tied to the holiday shortened week, but the government stressed that recent data received confirm the improvement. This probably makes next week's jobless clams report more important, but if confirmed by another improvement, expectations for payroll expansion should begin to rise.

In another favorable report the US International Trade gap shrank in July on both a rebound in exports and a drop in imports. The overall US trade deficit narrowed to $42.8B July from $49.8B in June. Capital goods led an increase in overall exports to $153.3B from $150.6B in June, while consumer goods led a decrease in overall imports to $196.1B from $200.3 billion in June. The narrower trade balance suggests that US Q3 GDP could be higher than Q2 GDP, which was dragged down by a negative contribution from the trade deficit.

In equities, Dow member McDonald's is off -3% after the company reported that August same store sales were up +4.9% y/y compared to July's +7% gain. Apple announced that it has relaxed some restrictions to its iOS Developer Program license as it tries to improve its App Store. Apple said it's relaxing restrictions on the development tools used to create iOS applications for its iPhone and iPad devices, as well as its iTunes app store. The move will give developers the flexibility they want as long as the resulting apps do not download any code. ADBE has surged +11% on the news as traders speculate that this may mean Apple will finally loosen their rules against Flash on its mobile devices. A sales executive from Ford warned that consumer spending in both the US and Europe will be below trend this year. The executive also stated that the Asian market recovery is moderating but still remains strong. F is about breakeven.

Core Sector List: Overall reading: 13 sectors advancing, 7 sectors declining
Strongest Sectors: Banks, Broker Dealers, Internet, Healthcare, Drugs
Weakest Sectors: Coal, Gold Miners, Real Estate


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