Intraday Market Update
US equities took a hit in early trading despite a better than expected retail sales report and a strong earnings beat from Best Buy, but the selling was short lived as stocks rebounded and tested highs from June and August. August retail sales rose by the largest amount in five months, while the August NFIB small business optimism index posted its first gain since July. All of the indexes experienced a sharp recovery from their daily lows but are now trading in the middle of their daily ranges and are hugging the flat line. The US dollar has lost -1% which is helping gold and silver. Gold has gained $25 (+2%) and has broken out to new all-time highs, while silver also continues motoring to new multi-year highs. Miners have surged on the strength as the GOX is up better than +4% on the day. Front month crude was hanging tough but is nearly -$2 off of its highs and is now firmly in the red, down -0.75%. Global equity markets were mixed with no significant moves higher or lower.

Overall retail sales in August continued to improve, rising +0.4% which follows a +0.3% gain in July. Today's report beat estimates calling for a +0.3% rise. Excluding autos, sales increased +0.6% which follows a +0.1% gain in July. Sales excluding autos and gasoline increased +0.5% which is a big improvement after a -0.1% decline in July. The rebound in July was led by a +1.9% gain in gasoline station sales, while food and beverage sales were up +1.3% and clothing sales were up +1.2%. Weakness was led by a -1.1% drop in electronics and appliances and a -0.9% decline in miscellaneous store sales. Today's report definitely shows that consumers are still spending, albeit at a modest pace, and pokes holes in the argument that the economy is headed for a double dip recession.

In earnings news, Best Buy (BBY) handily beat earnings estimates but revenue was below expectations. The electronics retailer raised its FY11 earnings estimates but also trimmed its revenue guidance. The company said the better earnings performance was because of mobile phone sales and reduced promotions. BBY is up +6% after the report. Supermarket chain Kroger (KR) reported earnings that were slightly better than estimates, while revenues were in line. The company said its sales have remained "solid" in the face of competitive and economic challenges and also reaffirmed its full year outlook. KR is up +2%.

Elsewhere, Nucor (NUE) was off by as much as -4.5% this morning after issuing an earnings warning due to the impact of accounting methods surrounding LIFO charges in its Q3 report. However, without the LIFO charges earnings are estimated to be in-line with estimates. Shares of NUE have recovered but are still down -2.8%. The Wall Street Journal reported that AIG is in talks with government officials to speed up its exit plan from the Treasury Department which could commence as early as the first half of 2011. AIG is down -2%.

Core Sector List: Overall reading: 11 sectors advancing, 9 sectors declining
Strongest Sectors: Gold Miners, Retail, Semi's
Weakest Sectors: Banks, Oil Services, Broker Dealers


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