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TODAY’S S&P 500 SET-UP - October 8, 2010

As we look at today’s set up for the S&P 500, the range is 16 points or -0.87% downside to 1148 and 0.51% upside to 1164. Equity futures are trading mixed to fair value ahead of today's key jobs report and following yesterday's inconclusive session which saw major indexes close little changed. After the close, Alcoa and Micron Technology opened the Q3 earning season. AA reported Q3 EPS $0.09, ex-items, vs. Reuters $0.05, and raised its 2010 forecast for global aluminum demand to 13% from 12%. MU reported Q4 EPS $0.32 vs. $0.39 and said demand softened significantly toward the end of the quarter.

  • Alcoa (AA) reported 3Q adj. EPS $0.09 vs estimate $0.05, raised 2010 aluminum consumption forecast to 13% from 12%
  • AngioDynamics (ANGO) cut FY 2011 EPS forecast to $0.47-0.50 from $0.53-$0.56, vs estimate $0.49
  • Bruker (BRKR) completed acquisition of Atomic Force Microscopy and Optical Industrial Metrology; Reiterated guidance
  • DragonWave (DRWI) reported 2Q revenues $27.2m vs estimate $26.9m
  • Kulicke and Soffa Industries (KLIC) sees 1Q revenue “significantly” below 4Q
  • Micron Technology (MU) reported 4Q revenues: $2.49b vs estiamte $2.66b
  • Onyx Pharmaceuticals (ONXX) delayed NDA for carfilzomib
  • Scansource (SCSC) raised 1Q revenue forecast to $623m-$633m from $555m-$575m, vs estimate $554.8m

 PERFORMANCE

  • One day: Dow (0.17%), S&P (0.16%), Nasdaq +0.13%, Russell 2000 (0.16%)
  • Month/Quarter-to-date: Dow +1.49%, S&P +1.48%, Nasdaq +0.64%, Russell +1.20%
  • Year-to-date: Dow +4.99%, S&P +3.85%, Nasdaq +5.05%, Russell +9.41%

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -240 (-53)
  • VOLUME: NYSE - 910.39 (-7.10%)  
  • SECTOR PERFORMANCE: Only three sectors rose yesterday - Materials (1.00%), Consumer Spls (0.35%), Financials (0.41%), Energy (0.50%), Industrials (0.22%), Healthcare +0.20%, Utilities +0.19%, Consumer Disc +0.47%, Tech flat - The lack of direction in the market was not too surprising ahead of tomorrow's release of September payrolls and the unofficial start of Q3 earnings season after the close.
  •  MARKET LEADING/LAGGING STOCKS YESTERDAY: Adobe +11.50%, JC Penney +9.10% and Abercrombie +8.91%/Marriott -5.78%, Owens Illinois -4.48% and Starwood -2.95%.
  • VIX: 21.56 +0.33% - YTD PERFORMANCE: (-0.55%)
  • SPX PUT/CALL RATIO: 1.38 from 1.43 -3.60%

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 17.65 0.203 (1.164%)
  • 3-MONTH T-BILL YIELD: 0.13% unchanged
  • YIELD CURVE: 2.05 from 2.03

COMMODITY/GROWTH EXPECTATION:

  • CRB: 287.30 -0.64%
  • Oil: 81.67 -1.87% biggest down day since August
  • COPPER: 367.95 -1.96%
  • GOLD: 1,334.57 -0.90%

CURRENCIES:

  • EURO: 1.3886 -0.28%
  • DOLLAR: 77.387 flat

OVERSEAS MARKETS:

Europe

  • European Markets: FTSE 100: (0.59%); DAX: (0.29%); CAC 40: (0.55%)
  • European markets opened lower in cautious trading with a focus on the US jobless report.
  • Major indices have traded in a narrow range between unchanged and down around (0.5%) and currently trade near the day's lows after stronger than expected UK PPI data.
  • Alcoa (AA) trades up +1% in Germany after its Q3 results last night. The auto, retail and banking sectors lead the regions fallers whilst basic resources and technology sectors lead a minority of sector gainers. US futures trade little changed
  • UK Sep PPI Output +4.4% y/y vs consensus +4.3% and prior 4.7%
  • UK Sep PPI Input +9.5% y/y vs consensus 8.6% and prior revised 8.7%
  • Bank of France released its Sep survey of industrial and service industries activity. Industrial activity picked up vs the lull in Aug, whilst the service sector increased strongly. Following the survey Central bank leaves its estimate of Q3 GDP unchanged at +0.3%

Asian

  • Asian Markets: Nikkei (0.99%); Hang Seng +0.16%; Shanghai Composite +3.13%
  • Ahead of today's US jobs report, Asian markets traded mixed with Shanghai up over 3% after being closed for a week, and the Nikkei down as the yen continues to flirt with record levels vs the US dollar.
  • After being closed a week for the Golden Week holiday, Shanghai stocks are sharply higher as they play catch-up with the rest of the world
  • Moody's said it is considering raising its A1 rating of China's sovereign debt. Moody's says it intends to conclude its review within a three-month period.
  • As the yen continues to strengthen versus a weakening dollar, Japan approved a ¥5.05T stimulus budget, larger than the ¥4.8T originally planned.
  • The yen is trading at 82.32 vs the US dollar 

Howard Penney

Managing Director

THE DAILY OUTLOOK - levels and trends

THE DAILY OUTLOOK - S P

THE DAILY OUTLOOK - VIX

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THE DAILY OUTLOOK - OIL

THE DAILY OUTLOOK - GOLD

THE DAILY OUTLOOK - COPPER