Market Update 9/27/06

[dibsy]

Equities rallied modestly following mixed economic data releases. Markets opened weaker following the release of soft August Durable Goods orders. The headline number decreased 0.5% versus expectations of a 0.5% increase, while Durable Goods Ex Transportation was down 2.0% versus expectations of a 0.5% increase. However, markets rallied off a strong increase in August New Home Sales to 4.1% (1.050mm homes) versus the expected 3.0% decrease (1.040mm homes) in home sales. The unexpected increase was driven by a major downward revision to the July number to 1.009mm new homes sold from 1.072mm homes. The Dow closed the day at 11,689, as it continues to approach all-time highs amidst all signs of a housing-driven economic slowdown. Oil prices rose as speculative buyers are again taking long positions. Treasuries did not uniformly respond to the mixed data, with 2-year Treasuries rising and 10- and 30-year Treasuries selling of slightly. The 10-year Treasury ended the day 2bp higher than Tuesday at 4.60%. The final 2Q GDP data will be released Thursday morning, with the market expecting no change to the 2.9% estimate.

The Terror-Tribunal bill designed to give terrorist suspects a military tribunal is moving closer to passing prior to the recess at week end for the November elections. Continuing the HP saga, Chairman and CEO Mark Hurd will have to explain the potentially illegal behavior of the company to Congress.

In other news, Dallas Cowboys Wide Receiver Terrell Owens allegedly attempted suicide Tuesday night by overdosing on pain medication. Finally, if you're wondering why all the women are looking at their hands, UK researchers say that women whose ring fingers are longer than their index fingers tend to be better athletes than those with equal-sized fingers.

US Treasuries at 8am
5-year 4.54%
10-year 4.58%
30-year 4.71%

US Treasuries at 5pm
5-year 4.55%
10-year 4.60%
30-year 4.74%

Equities at Close
DJIA 11689 [+20pts, +0.17%]
S&P 500 1337 [+0 pts, +0.02%]
Nasdaq 2263 [+2 pts, +0.09%]