Intraday Market Update
US equities are posting modest losses but are holding their ground after yesterday's big advance, and ahead of the FOMC monetary policy announcement this afternoon at 2:15 PM EST. Traders are exercising caution as they wait to hear where the Fed stands on the US economy given the recent string of mixed data since their last meeting. Popular opinion suggests there will be no policy changes, but a cautionary eye will remain on the verbiage which may hint at the resumption of large scale asset purchases as we head into the fourth quarter. The S&P 500 remains above its key breakout level of 1,130 which was the top of the sideways trading range from mid-May until yesterday morning. Commodities are under pressure with crude oil losing -1% and gold down -$8 as it consolidates just below its all-time highs. There were no significant movements in overseas equity markets as they closed mixed with a slight lean to the downside.

In the pre-market, an upbeat housing report showed starts and building permits hit their highest levels since the expiration of the homebuyer tax credits in April. However, the gain in August was pulled higher by a +32.2% surge in multi-family housing starts, which follows a +36.0% rise in July. On the other hand, single-family housing starts continue to be weak as they declined -1% m/m in August reaching a 16-month low. Nonetheless, this is the best overall reading since March and may provide some much needed stability to the housing sector.

In equities, AutoZone (AZO) is down -1.4% after reporting earnings that were mostly in-line with estimates. ConAgra Foods (CAG) is down more than -5% after their earnings missed on the top and bottom line and offering cautious guidance. Cruise ship operator Carnival Corp. gapped nearly +3% higher after an upbeat earnings report and guidance, although the stock is near breakeven now. Carnival said that booking volumes for the remainder of 2010 and the first half of 2011 are running ahead of the prior year and are at prices in-line with prior year levels.

Meanwhile, Hewlett-Packard and Oracle announced a resolution surrounding litigation regarding Oracle's hiring of former Hewlett-Packard CEO Mark Hurd. The terms of the agreement were not disclosed but the companies said Mark Hurd "will adhere to his obligations to protect HP's confidential information while fulfilling his responsibilities at Oracle." The companies also said the agreement reaffirms their commitment to work together.

News flows are light as attention is now turned to the FOMC policy announcement this afternoon. Jobless Claims, Existing Home Sales, and Leading Indicators will be released Thursday morning with Durable Goods and New Home Sales on Friday.

Core Sector List: Overall reading: 3 sectors advancing, 17 sectors declining
Strongest Sectors: Gold Miners, Coal Miners, Software, Broker Dealers
Weakest Sectors: Internet, Transportation, Home Construction


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