Intraday Market Update
As the first full week of trading in October begins US equities are under solid pressure on the heels of a weak session in Europe. A stronger than expected pending home sales report, along with a decent reading on factory orders (excluding transportation), hasn't been enough to push equities higher. Microsoft (-2.3%) is weighing down the market after Goldman Sachs cut their rating on the stock to neutral. All of the major indexes are posting solid losses being led by -nearly -1.50% drops in the NASDAQ and Russell 2000. US Treasury prices are catching bid which has pushed the 10-year yield back below 2.50%. Gold is relatively flat as it consolidates near all-time highs. Crude oil remains near three month highs at $82.00 per barrel. Overseas, the Asia-Pacific region was mostly higher, while European markets posted solid declines.

Pending homes increased +4.3% m/m in August which is more than estimates that called for +2.5% gain. However, the y/y comparison to August 2009 shows pending home sales are down -18.4%, while July's report was revised lower from a +5.2% gain to a +4.5% gain. Nonetheless, pending home sales are moving in the right direction after the depressed post-stimulus levels.

In other economic news, factory orders declined in August but the number was skewed by a m/m dip in aircraft. The headline number showed that factory orders fell -0.5% in August, however, when stripping out transportation orders were up +0.9%. Details showed a -1.5% decline in durable goods (revised lower from -1.3%) while the first reading on non-durables were up +0.3% on strength in chemicals.

In equities, M&A deals keep making headlines. Sanofi-Aventis (SNY) has taken their bid for Genzyme (GENZ: $71.15) hostile by offering $69 per share. SNY said its "strong preference" is to engage in constructive discussions with GENZ, but GENZ's continued refusal to do so has led SNY to commence the tender offer. Elsewhere, Sara Lee (SLE) has surged +7.50% after the NY Post reported the company rejected a $12 billion leveraged buyout offer from Krispy Kreme Donuts (KKR). Actel Corp (ACTL) has gained more than +30% on the heels of an offer from Microsemi Corp (MSCC). MSCC has also gained +8% as traders cheer the news.

Core Sector List: Overall reading: 1 sectors advancing, 19 sectors declining
Strongest Sectors: Real Estate
Weakest Sectors: Miners, Oil Services, Semiconductors, Software


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