TradeTheNews.com US Market Update

Dow -64  S&P -6.3  NASDAQ -12.6

***Economic Data***

– (TU) Turkey July Industrial Confidence: 114.1 v 114.6 prior; Capacity Utilization: 75.4% v 77.3%e
– (US) Jun Chicago Fed National Activity Index: -0.46 v -0.40e
– (BE) Belgium July Business Confidence: -2.5 v -2.1e; Nine-month low
– (US) July Dallas Fed Manufacturing Activity: -2.0 v -5.2e
– (IS) Israel Central Bank leaves Base Rate unchanged at 3.25%; As expected

– Markets are grappling with the idea that no debt ceiling deal will get done before the August 2nd deadline is a real possibility, after negotiations between the White House and Congress became even more dysfunctional over the weekend. At this point, Senate Majority Leader Reid is offering a long-term approach, including a $2.4T debt ceiling increase and $2.7T in spending cuts and no new revenues. House Speaker Boehner is offering a vaguer plan including $1.6T debt ceiling increase with $1.2T in cuts determined by a Congressional panel in the future. Neither side seems willing to compromise on its goals, however. Given the irreplaceable position US Treasuries hold in global markets, some analysts suspect that AA will simply become the new AAA after potential sovereign downgrades. Some say the financial sector could even benefit from inevitably higher rates, although no one really knows what the potential impacts of a default may be. Interestingly continuing concerns about contagion affecting Italy and Spain have benefited US Treasuries this morning, showing that even with the debt ceiling disaster looming, USTs still have some safe haven status. Spot gold is just below all-time highs around $1,618. The 10-year has pared early losses to trade nearly unchanged pushing the yield back below 3%. The long bond is not faring as well though as it yield holds near 4.3%.

– Shares of hospital management firm HCA fell as much as 14% in the premarket after the firm’s adjusted profit in its second quarter came in lower than expected, thanks to lower demand for surgery treatment. The firm has also reduced its full-year EBITDA guidance slightly. Shares of other hospital managers, including THC and HMA, are down 4% on the news. Shares of oil services name Baker Hughes are in the red after the firm met expectations but also warned that new permits being issued by the government allowed only a limited resumption of deepwater activity in the Gulf of Mexico. HAL and SLB traded off slightly on the comments, but swiftly regained their losses. Elsewhere in healthcare, Kimberly Clark met analysts’ estimates in its Q2 and reiterated its FY11 outlook, although it did warn that costs would be impact the firm’s profit levels. Aerospace component maker Eaton is up 4% on higher guidance and positive comments on profit margins in FY11. RIMM is off nearly 4% after announcing sweeping job cuts at the firm.

– Concerns over the debt limit ahead of the August 2nd deadline and possible default were weighing on risk appetite but no evidence of panic persisted in the NY morning. Overall, the price action was subdued with the CHF currency consolidating its earlier gains. USD/CHF at 0.8045 while EUR/CHF cross hovered around the 1.1545 area.

***Looking Ahead***

– 11:30 US Treasury to sell $27B in 3-month and $24B in 6-month Bills
– 16:00 President Obama delivers remarks
– 10:33 AM Market Internals update at 10:30ET

– NYSE volume 165M shares, about 11% belowits three-month average; decliners lead advancers by 3.3:1.
– NASDAQ volume 380M shares, about 12% below its three-month average; decliners lead advancers by 2.4:1.
– VIX index +7.5% at just over 18.00

5:55 AM TradeTheNews.com European Market Update: Safe-haven flows reflect uncertainty over US debt negotiations.

This information was brought to you courtesy of TradetheNews.com, for your free trial Click Here