U.S. equity markets finally caught a bid on Friday after a better than expected, albeit lackluster, GDP report pushed the Dow, Nasdaq, and S&P 500 higher by 1.65 percent, 1.65 percent, and 1.66 percent respectively. The narrative remains the same for equities as stocks continue to trade in a range and technical's are driving the trading action on light volume.  From a technical perspective, the 1040 level on the S&P 500 remains a key support level to the downside that held last week and bounced higher on Friday closing at 1064.59.

 The Equity markets look to open flat this morning after the DOW, S&P and NASDAQ all managed to gain at least 1% yesterday.  This rally was partially attributable to a report showing industrial production was 1% in July and positive corporate earnings.  Industrial production was double the .5% economists were expecting.

 The big news this morning is the market’s reaction to the Fed’s commentary about the economy and decision to purchase longer-term Treasuries.  Both US and Global equity futures are pointing to a lower opening as there are major concerns about the stability of the economic recovery.  While equities recovered slightly yesterday after the Fed’s announcement to continue to provide liquidity into the marketplace, it was more of the old “buy on the rumor, sell on the news.” 

 In addition to the forthcoming economic data highlighted in Dr. Walker’s Economic Weekly, the FOMC is set to release its rate decision tomorrow around 2:15 pm et. This meeting trumps all else this week as, for the first time in a long time, there could be a change in monetary policy. Recall that back in March many market participants, including Bill Gross, head of PIMCO, were calling for the end of the bull market for bonds and an increasing likelihood that the Fed was getting closer to tightening monetary policy.

 Today is a critical day for both the markets and the economy as the Labor Department is set to release the full employment report at 8:30 am. The consensus forecast is for the Unemployment Rate to inch up to 9.6% from 9.5% last month. While the Unemployment Rate is the headline number, the more critical reading is the Change in Private Payrolls surveyed to add 90K jobs. If the change in private payrolls is positive, it will mark the seventh consecutive month of registering job gains. The problem, however, is that we really need to consistently add north of 200k jobs per month to put a dent in the Unemployment Rate.