It's another busy day of reporting on all of the loose ends that are making it difficult to tie up any convincing trend in the equity market.

Debt ceiling/deficit negotiations seem to be going about as well as marriage counseling went for John and Lorena Bobbit; Moody's put the U.S. on review for possible downgrade (as it previously said it would) due to the seeming lack of progress on reaching a debt ceiling compromise; Italy auctioned off new debt at higher-than-desired yields; and JPMorgan Chase (JPM) topped the Capital IQ consensus earnings estimate by seven cents, aided by a $1 bln reduction in credit card reserves.

In addition, the market is digesting a key batch of economic data in the U.S. that includes the initial claims, PPI, and retail sales reports.  The data, in aggregate, can be considered mixed, which is only fitting for the current environment that lacks closure on many debatable fronts.

Initial claims for the week ending July 9 declined 22,000 to 405,000 (Briefing.com consensus 410,000).  That is a move in the right direction, although there are two caveats: (1) the claims level is still above 400,000, so it's not a good indication for strong payroll growth and (2) seasonal adjustment factors played a part in the improvement, according to the Department of Labor, as layoffs in the auto sector were less than normal this time of year since plants were still getting back up to speed from the Japan-related slowdown.

Continuing claims for the week ending July 2 rose by 15,000 to 3.727 mln (Briefing.com consensus 3.700 mln).

Producer prices declined 0.4% in June (Briefing.com consensus -0.2%), led by a 2.8% decrease in the index for finished energy goods.  The latter was the largest decline since July 2009 due to a 4.7% drop in prices for gasoline, which accounted for two-thirds of the monthly decline.

Core producer prices, on the other hand, rose by 0.3% (Briefing.com consensus +0.2%).  Nearly half of the advance was due to higher prices for light motor trucks, which were up 1.6%, while an advance in the index for plastic products also played a role.

In brief, overall inflation pressures for producers have abated somewhat with the decline in energy prices, and, with auto production getting back up to speed, the increased supply and added competition should help stem further price increases in the auto sector that should help tame the core increase.  The Consumer Price Index will be released tomorrow and will be watched closely for any pass-through of higher prices.

Retail sales for June turned out better than expected.  They rose 0.1% versus the Briefing.com consensus estimate that called for a 0.2% decline.  Furthermore, retail sales for May were revised up to a 0.1% decline form an originally reported 0.2% decline.

Excluding autos, retail sales were unchanged.  That was in-line with expectations, but, unlike total sales, there was a downward revision for May from +0.3% to +0.2%.

Core retail sales, which exclude auto, gas station, and building material sales, increased 0.1%.

All in all, the retail sales report was better than feared, yet with month-to-month declines in furniture and home furnishing, electronics and appliance, and sporting goods, hobby, book and music stores, concerns about a slowdown in discretionary spending will continue to linger.

The futures market improved slightly on the other side of the data.  It was already in a recovery mode from earlier losses, however, as JPMorgan's report helped turn the tide of sentiment a bit.

Currently, the S&P futures are 0.3% above fair value and are signaling a slightly higher start for the cash market.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is the Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial please email researchsales@briefing.com.