Trade the News Market Internals Update at 14:00ET

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Dow +25 S&P +6.8 NASDAQ +22

***Economic Data***

– (BE) Belgium Sept Business Confidence: -9.4 v-9.0e
– (MX) Mexico Aug Unemployment Rate: 5.8% v 5.6%e
– (BR) Brazil Aug Current Account: -$4.9B v -$3.0Be; Foreign Direct Investment (FDI): $5.6B v $4.2Be

– European markets took a nasty tumble earlier this morning after reports made the rounds that the Greeks were examining scenarios for defaulting on their debt (later denied) and the EU Commission contested earlier reports that it was accelerating recapitalization of its banking system. As in prior dips, French banks led the plunge lower. S&P500 futures sank in the premarket, testing yesterday’s low of 1106 and briefly nearing the August low of 1101, although they had mostly recovered by the open of cash trade. European bank shares led European and US equities higher as unconfirmed chatter made the rounds that the France may be putting together a TARP-like program to recapitalize its banks. Select US banks have made big gains in early US cash trading, with beaten-down shares of Bank of America and Morgan Stanley rising 3% and 5%, respectively. Metals continue to sink lower, with spot gold down nearly $65 on the day to trade around $1,667 while copper is down 4.5% and silver is down 10%. Bund and Treasury yields have backed up a bit as European equities have rebounded. The US 10-year has moved back above 1.75%.

– After gaining sharply over the last three US sessions on chatter that the board would dump CEO Apotheker, shares of Hewlett-Packard are down nearly 4% as investors vote with their feet against the choice of former EBay CEO Meg Whitman as the new HP chief. Nike is the latest consumer products firm to offer very strong quarterly results despite the economic slowdown. Shares of NKE are up 6% after the firm beat profit targets in its Q1 and raised its full-year revenue outlook. Mosaic offered a preliminary look at its Q1 results, with profits well below expectations even as revenue came in stronger. Mosaic’s costs for ammonia and sulfur in its phosphate segment jumped during the quarter, eating into profit. Shares of MOS are down nearly 6%, while competitors POT, CF and AGU are all around unchanged. Homebuilder KB Home lost slightly less in its Q3 than expected and logged a strong rise in new orders similar to those see at Lennar and Hovnanian in their Q3 reports. Shares of KBH spiked 6% in early trading before giving up most of their gains.

– The technical picture played a role in curbing risk aversion in the session in both currencies and US equities. Dealers saw Fibonacci support in EUR/USD at 1.3410 which corresponded to a 50% retracement of the 1.1875 June 2010 low to the 1.4939 May 2011 high. ECB’s Nowotny commented that the central bank would discuss whether it should provide liquidity on a one-year basis also helped counter the initial bearish sentiment. Dealers noted that the annual gathering of the IMF, World and ad-hoc G20 side meeting could provide an opportunity to coordinate measures to fight the global financial crisis.

***Looking Ahead***

– 11:00 (US) Fed to purchase $0.50-1.25B in Notes/Bonds
– 13:30 (US) Fed’s Dudley to Speak on Panel in Washington
– 14:00 (US) Fed’s Williams on unconventional Monetary Policy in Zurich
– 15:00 (AR) Argentina July Economic Activity Index M/M: no est v 0.4% prior; Y/Y: 7.5%e v 8.25 prior
– 15:00 (AR) Argentina Q2 Current Account: No est v -$673M prior
– 15:00 (AR) Argentina July Industrial Production M/M: No est v -0.6% prior
– 15:00 (AR) Argentina Aug Industrial Production M/M: No est v -0.6% prior; Y/Y: No est v 7.1% prior
– 16:30 (EU) ECB’s Trichet speaking in Washington

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