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U.S Market Update

Mon, Aug 3 2009, 15:18 GMT

TradeTheNews.com

- Follow-through strength from Europe and Asia bid up US futures before the bell while the ISM data helped sustain momentum after the open. At 10:30amET the S&P500 broke above the 1,000 mark at for the first time since November 5th, 2008. The July ISM Manufacturing index was better than expected, while the prices paid and new orders sub indices were both above 55, indicating growth. This is the seventh consecutive gain in the index, although the headline number still remains below the 50 level. The ISM's Ore said that it would be difficult to convince manufacturers the US is on the brink of recovery, "but the data suggests that we will see growth in the third quarter if the trends continue." Yesterday former Fed Chairman Alan Greenspan told ABC's George Stephanopoulos he is "short term optomistic with many caveats," in particular housing and hopes the Fed can hold off on rate hikes for "a couple of years" (but does not believe they have that much time). Front-month NYMEX crude is finding traction above $70 once again while copper has made another high going back to October.  Treasury prices are under pressure pushing the 10-year yield back above 3.65% ahead of this afternoon's quarterly refunding announcement.

- In earnings news, MGM's loss in the second quarter was much higher than expected, thanks to impairment charges and big costs for retiring debt. Investors are looking past the results, with shares of MGM spiking up as much as +7% just after the bell and around +3% mid morning. Conglomerate Lowes Corp missed earnings estimates, driven primarily by impairment charges Loews had to take on investments losses at insurance subsidiary CNA Financial. CNA's quarterly earnings exceeded analysts estimates. Shares of CAN are up 10%, while L is up 4% and headed in the right direction. Tyson Foods beat earnings and revenue targets thanks to cost cutting and lower input costs. Shares of TSN were up 4% in the premarket, but have quickly sunk to around -4% early trading. Second-tier energy names Marathon Oil and FirstEnergy are up in the low single digits after offering solid second quarter results and exceeding analysts targets.

- In currencies, the greenback hit fresh 2009 lows against European and commodity-related pairs, with EUR/USD testing the 1.4400 level, USD/CHF probing the 1.0600 and GBP/USD above the 1.69 handle. Continued strength in global equity markets highlighted the ever growing appetite for risk, which is providing a negative backdrop for the USD. Pre-Lehman collapse PMI readings throughout most of Europe have driven stock markets higher this morning. Sterling led the pack as the UK PMI manufacturing moved above the pivotal 50 level for the first time since April 2008. In the US, the ISM survey is only boosting risk appetite.

- Note that the overall tone for the USD is nearing some key chart momentum points, with the 1.06 area being eyed in USD/CHF. The SNB will report its July CPI data in tomorrow's session and intervention chatter could get louder if the pairs is below 1.06 for any prolonged period of time. In addition, the RBA has a rate decision on Tuesday, and could step up its rhetoric over strength of AUD.

Published on  Mon, Aug 3 2009, 15:19 GMT