Intraday Market Update
Traders were enthusiastic in the pre-market this morning after a better than expected initial jobless claims report helped stocks and commodities add to recent gains while the US Dollar's slide continued. The S&P 500 gaped higher at the open but the enthusiasm quickly faded as traders took the opportunity to sell positions ahead of tomorrow's pivotal non-farm payrolls report. The US Dollar reversed course and is now posting gains, while commodities are under pressure. Gold and crude oil are potentially putting in reversal patterns. Gold printed another new all-time high of $1,366 per ounce, however, it has reversed course and is more than -$30 off of its high (currently trading at $1,336 per ounce). After crude oil peeked its head to fresh 5 months highs not seen since before the flash crash, it also reversed and has lost nearly -2%. All of the major indexes are posting losses but are off of their lows. Pimco's CEO and Co-CIO Mohamed El-Erian told CNBC that equities have already priced in an orchestrated quantitative easing policy announcement in November from both the Bank of England and the Federal Reserve. Overseas, equities were mixed with no big moves in either direction.

In the pre-market, the better than expected weekly initial jobless claims report indicates that the employment market is at least not getting worse based on incremental decreases in the number continuing claims and initial claims. Initial claims fell -11,000 to 445,000 while continuing claims fell -48,000 to 4.462 million. The four week average for initial claims is declined for the sixth straight week and is down about -25,000 m/m. The four-week average for continuing claims fell for the fourth straight week and is slightly lower m/m. Today's report contradicts yesterday's disappointing ADP report and makes tomorrow's non-farm payroll report even more critical.

Meanwhile, same store sales reports from retailers are making the headlines and the results are mostly better than estimates. Overall same store sales were up closer to +3% compared to estimates calling for a +2% rise. Clothing retailers and department stores have mostly beat estimates indicating the back to school season was stronger than expected. Abercrombie (ANF +9%), American Eagle (AEO +7.3%), Dillard's (DDS +7.5%) and Limited (LTD +3.7%) are making notable moves to the upside. On the other hand, The Gap (GPS -3%), along with a few big box retailers like Target and BJ's Wholesale fell short of estimates, but these stocks are holding up relatively well.

Elsewhere, shares of Marriott (HOT) and PepsiCo (PEP) are under pressure after reporting earnings in line with expectations, however, both companies lowered the top end of their previous guidance for the year. Hot is off -4.5% while PEP is off -3.5%.

Core Sector List: Overall reading: 4 sectors advancing, 16 sectors declining
Strongest Sectors: Semiconductors, Software, Drugs, Biotech's
Weakest Sectors: Gold Miners, Home Construction, Banks, Natural Gas


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