Intraday Market Update
Enthusiasm was upbeat in the pre-market this morning as the S&P 500 gapped higher at the open after positive earnings reports from Research In Motion and Oracle after the bell yesterday. The S&P 500 tagged the June 21st high within the first 10 minutes of trading before the selling began. The worst consumer sentiment reading since August 2009 sent the index back into this week's trading range, keeping traders guessing as they game the market on this triple witching options expiration Friday when multiple forms options and futures contracts expire. In early afternoon trading it appears there will be no breakout from this week's directionless trading range as we head into the weekend. The Russell 2000 and NASDAQ are posting modest gains while the S&P 500 and DJIA are hugging the flat line and struggling to hold onto gains. The sell-off in crude oil continues as the front month contract has lost another -1.5% on the day and nearly -6% since Tuesday's high. Gold (+$4) continues to motor higher but is about $7 off of its highs. Overseas, the Asia-Pacific markets were mostly higher led by Japan and Hong Kong posting better than +1% gains. European equities gave up solid early gains and posted solid losses on renewed sovereign debt concerns.

CDS spreads between the 10-year Irish and German bonds hit a fresh all-time high of 369 bps after a report from the Irish Independent hit the wires this morning. The report cited an analyst from Barclays that said Ireland may need to solicit additional aid from the IMF and the EU if its fiscal situation deteriorates. The analyst said "Ireland does not need aid, at least not yet," but insisted the Irish Treasury cannot afford unexpected financial sector losses. CDS spreads from other European PIIGS countries also began widening on the report which sent equities in the region to close at their weekly lows.

In US economic news, the Consumer Price Index posted a small rise in August thanks to higher energy costs, but outside of a big jump in volatile gas prices, inflation was essentially non-existent as it posted a reading 0.0%, compared to estimates calling for a +0.1% rise. The headline number, including volatile food and energy costs, met estimates at +0.3%.

Elsewhere, the University of Michigan Consumer Sentiment Index of 500 households is shifting into reverse. The mid-September reading fell more than -2 points to 66.6 which is the lowest reading since August 2009 and erases last month's recovery. Although the current economic conditions component remained steady, its the future expectations component that is troubling. This leading indicator fell nearly -4 points to 59.1 which is the lowest reading of the recovery and is near October/November 2008 levels. In addition, inflation expectations took a hit falling to 2.2% which is one of the lowest readings on the books. This, coupled with a flat CPI reading, could certainly re-stoke the deflation debate.

In equities, Oracle (ORCL) is up better than +7% after they beat on the top and bottom line yesterday in their earnings report. Oracle's CEO said he is seeing purchasing orders "getting bigger" as customers are buying both software and hardware from the company. RIMM has gained +1.8% after they beat earnings and guidance was above par. Texas Instruments (TXN) is up +3% after increasing their dividend and announcing a huge $7.5 billion stock buyback program that is worth approximately 25% of the company's current market cap. Illinois Toolworks (ITW) is flat after offering a string revenue update. The industrial company said its worldwide end markets continued to show solid demand, especially those associated with its welding, automotive, and industrial packaging businesses.

Everyone have a great weekend and we look forward to catching up with you tomorrow.

Core Sector List: Overall reading: 9 sectors advancing, 11 sectors declining
Strongest Sectors: Software, Internet, Telecom
Weakest Sectors: Coal Miners, Gold Miners, Oil, Natural Gas


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