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MARKET WRAP – INVESTORS SHRUG OFF BAD NEWS

A very bad Philly Fed report, a negative jobless claims report and a terrible quarterly update from Toll Brothers was not enough to derail the market.  Stocks rallied almost 1% in the final 30 minutes of trading to end the day slightly positive.  Volume was very low again and breadth was fairly even.  It’s not clear if investors are just flat out ignoring the many warnings signs in the equity markets or if we’re just trading on pure technicals and end of quarter window dressing/expiration.  One thing is clear – there was little to no reason to feel more comfortable about the risk markets based on today’s news.

U.S. Economy
The U.S. Labor Department said that jobless claims were up 12,000 last week to 472,000, more than expected. The September U.S. T-bonds jumped up 1.07/32nds to 124.29/32nds.

The Labor Department also said that the consumer price index was down .2% in May and up 2.0% from a year ago, as expected.

The Philadelphia Federal Reserve’s regional index of manufacturing fell from 21.4 to 8.0 in June, weaker than expected.

The Conference Board’s index of leading indicators was up .4% in May, as expected.

Grains and Cotton
The USDA said that, compared to the four-week average, last week’s net sales of corn were up 21% and cotton were down 11%. Soybeans had a net reduction in sales of 136,300 tons. November soybeans were up a half-cent at $9.25.

Two weeks into its new 2010-2011 season, wheat exports are starting up 15% from a year ago. July wheat ended up 1.5 cents at $4.627.

Livestock
The USDA said that net sales of beef totaled 10,400 tons, down 13% from the four-week average. August cattle closed down .55 at 88.62.

August hogs closed down .97 at 82.15 with concerns about weaker demand.

Orange juice
According to Bloomberg news, the corporate director at Cutrale, Brazil’s leading orange producer, said that Brazil’s orange harvest will total 286 million (90 pound) boxes in 2010, the lowest in seven years. In 2011, he expects Brazil to harvest 336 million boxes (see article). July orange juice was down .0045 at $1.4225.

Energies
The U.S. Department of Energy (DOE) said that underground supplies of natural gas were up 87 billion cubic feet last week to 2.543 trillion cubic feet. Supplies are now up slightly from a year ago. August natural gas closed up 18.1 cents at $5.212.

August crude oil closed down .68 at $78.04, as traders were not impressed with today’s weak economic news.

Metals
August gold finished up $18.20 at $1,248.70, near the contract high, supported by today’s disappointing jobless claims numbers and low interest rate environment.

July copper dropped 9 cents to $2.9055, hurt by the weak Philly Fed manufacturing report and overall perception of weak economic growth.

Currencies
The U.K.’s Office for National Statistics said that retail sales volume was up .6% in May and up 2.2% from a year ago, better than expected. The September British pound was up .0016 at $1.4811.

Statistics Canada said that wholesale sales were down .3% in April to C$44.0 billion. The September Canadian dollar fell .38 to 97.20.

Eurostat said that construction output in the EU-27 was unchanged in April and up 4.3% from a year ago.

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