Morning Update

Overnight U.S. Stock News

• September S&Ps this morning are trading up +14.70 points. The US stock market last Friday whipsawed higher and held its gains after Fed Chairman Bernanke indicated the economy isn't deteriorating enough to warrant any immediate stimulus: Dow Jones +1.21%, S&P 500 +1.51%, Nasdaq Composite +2.49%. The Nasdaq posted a 1-week high. Bullish factors included (1) comments from Fed Chairman Bernanke that indicate economic optimism when he said "it may take some time, but we can reasonably expect to see a return to growth rates and employment levels consistent with those underlying fundamentals," (2) the unexpected upward revision to Q2 U.S. personal consumption (+0.4% versus the previously reported +0.2%, and (3) low stock valuations that prompted hedge fund managers to purchase stocks after recent declines left stocks in the S&P 500 trading at 12.7 times reported earnings, more than 20% below their 5-decade average.
• Bearish factors included (1) the larger-than-expected downward revision to Q1 U.S. GDP (+1.0% q/q annualized versus expectations of +1.1% q/q annualized), (2) the unexpected upward revision to the Q2 core PCE deflator which matched its highest level in 3-years (+2.2% q/q versus the originally reported +2.1% q/q), and (3) initial disappointment that Fed Chairman Bernanke failed to announce any immediate stimulus measures to bolster the economy.
• Pfizer (PFE) rose 1.2% in European trading after the company's Crizotinib drug won approval for treatment against lung cancer.