Market Update –12:51pm

· Market Update – tape hit early on back of some negatives (NOK, FDX, Spain, housing), but remains resilient and rallies off lows; another very dull session w/o much news; tape tone continues to improve; 200day now support (1109); breaking BP headline on NYT rallying tape into green (NYT says BP has agreed to place $20B into an escrow account) while Bloomberg article also helping (says House Dem block against Lincoln swaps amendment); tech leads on AAPL strength.  Stocks are moving off the lows of the session as buyers continue to view pullbacks as an opportunity to cover shorts and accumulate long exposure.  The desk still remains on the quiet side and people aren’t rushing to buy, but selling continues to dry up (sell demand has been exhausted for last 1.5 wk now) and longs are def. starting to nibble; performance anxiety also more acute w/2 weeks left in the Q and given how much de-risking has occurred and how poor May performance has been.  On the newsflow front this morning, the big highlight was the FDX earnings release – the #s for the Q were fine, but the stock was hit (dwn ~2% heading into the afternoon) on conservative guidance.  NOK is down ~10% after issuing a profit warning this morning, but the sp500 info tech index is outperforming today (actually up on the day) as the miss was expected and the co’s problems are viewed as company specific (AAPL is leading tech on the upside today; AT&T just came out and said pre-sale demand for the iPhone 4 was 10x as large as the 3GS).  There has been a lot of chatter around Spain in the last few days, w/most of it centering on whether the country will be forced to activate the EU/IMF rescue mechanism (the same on that Greece utilized weeks back).  Also – there is talk that Moody’s may take its current Aaa rating on Spain down to one more inline w/S&P and Fitch (both of which have Spain @ AA).  Despite all the noise, the markets don’t seem too worried - Spain CDS are flat on the day and the euro has rallied off its lows.  Spanish officials are telling the wires today that stress test results from its banking industry will be published soon to help put to rest any concerns about their solvency.  The NYT just broke a story that BP has agreed to place $20B into an escrow account, which is helping to rally the tape.  Away from these items (NOK, FDX, Spain, BP), the newsflow has been VERY light and this “no news is good news” environment is helping risk assets.  The big events for the rest of the week will be tomorrow morning’s Spanish auction (10yr, 30yr) and Fri’s rebalance/expiration.