4:15PM Fears of inflation, higher oil price and lower earnings knock averages down.

-Yield on 10-year bond closed at 4.994% and 30-year bond closed at 5.080%.
-Crude oil gained 51 cents to close at $74.91.
-Gold gained $12.10 to close at $646.30.

-Asian Markets were mixed, being led by Indonesia which closed ahead at 1.48%. Japan traded lower at 0.10%. S. Korea lost 0.81%.

-European Markets closed lower again today, led by Germany which had a loss of 1.50%, and S. Africa which a decline of 1.29%. Norway was up 0.26%.

-Latin American Markets traded lower, led by a 1.13% decline in Brazil. Mexico declined 0.54%. Canada gained 0.18%.


4:00PM Domestic Auto Makers Decline.
Ford (F: chart) declined for the sixth straight month in sales of cars and light trucks. The company’s top selling truck, the F-Series pickup, fell 46% in July from its record of 126,905 sold a year ago. Ford is down 35% from a year ago. Chrysler (DCX: chart) car sales declined to 150,349, from last year’s sales of 240,146. The company is down 34% from last year. GM (GM: chart) declined 22% in sales of light vehicles from a year ago. Light truck sales fell 31% and car sales declined 4.2%. GM is down 22% from a year ago. Toyota (TM: chart) sales surpassed Ford sales in July making it the number two auto maker for the first time. The company’s auto sales in June were 15%, down from 17% in the year-ago. The auto maker sold 241,826 vehicles in June.

Incentive deals for the three automakers are mixed due to heavy discounting last year, fueled by foreign competition and rising fuel costs. Ford has been offering pre-paid fuel cards and five-year interest-free financing. Chrysler began its employee discount program at the end of June again, and three-year 0% financing on most of its 2006 models. GM recently began offering discounts and no-interest financing on some of its models, which will end September 1st.

12:30PM European markets closed steeply lower.
European markets finished steeply lower on interest rate concerns and mixed earnings reports. European investors picked up Wall Street fears of interest-rate hikes, awaiting the European Central Bank rate-hike decision on Thursday. Among movers, Dutch telecom KPN climbed 5.6% due to doubled second-quarter profit and lifted outlook. Deutsche Bank shares fell 4.7% as quarterly earnings growth came in below estimates. Low-cost airline Ryanair also dropped 3.5% on cautious guidance for the rest of the year. Other decliners included DaimlerChrysler, falling 2% on 34% sales decline in the U.S. and Vodafone, down 1.7% after Verizon Communications'' CEO said that Vodafone wasn''t interested in selling its 45% Verizon Wireless stake. The German DAX 30 slid 1.5%, the French CAC 40 fell 1.2%, and London FTSE 100 lost 0.8%.

Oil prices advanced on supply concerns, related to a tropical storm in the Caribbean and the violent conflict in the Middle East. Light crude September delivery rose 35 cents to $74.75 a barrel. Gasoline rose 5 cents to $2.2625 a gallon, while natural gas dropped 17 cents to $8.04 per 1,000 cubic feet. London Brent gained 32 cents to $75.47. The dollar gained ground versus major currencies. The euro traded at $1.2744, down from $1.2768. The dollar bought 115.17 yen, up from 114.56. The British pound stood at $1.8667, down from $1.8678. European gold prices traded mixed. In London the precious metal traded at $630.80, down from $632.58 per ounce. In Zurich gold traded at $638.18, up from $631.78. Silver closed at $11.45, up from $11.27.


11:30AM Strong economic data raised inflation worries.
Stock markets continued to trade lower on inflation worries, sparked by strong economic data. The ISM''s manufacturing index added to investor interest rate worries, as the index rose to 54.7 in July, far better than the 53 reading economists had expected. In another report, the Commerce Department said that construction spending rose 0.3%, exceeding expectations of 0.2% growth.

Disappointing earnings news also generated some negative sentiment, with Affymetrix (AFFX: chart), down 15%, leading the biotechnology sector lower after reporting a wider-than-expected Q2 loss. Hilton Hotels Corp. (HLT: chart) fell 1% after reporting Q2 profit fell 29%, despite a jump in revenue. Hilton earned 35 cents per share, down from 49 cents per share a year earlier. The Nasdaq showed a notable downward move, reflecting significant weakness in the technology sector. The airline sector also turned in one of the market''s worst performances due to a notable increase by the price of oil. In late morning trading, the Dow Jones industrial average fell 85.49, or 0.76%. The Standard & Poor''s 500 index lost 9.80, or 0.77%, and the Nasdaq composite index dropped 31.39, or 1.5%.

Auto maker DaimlerChrysler AG (DCX: chart) reported that its total group sales in U.S. for the month of July declined 34% to 171,940 passenger vehicles. Chrysler Group, comprising Chrysler, Jeep and Dodge brands, posted sales of 150,349 vehicles in the U.S., a decrease of 37% from last year. Mercedes-Benz USA sales for the month rose 4% to 21,591 vehicles.

Construction spending growth exceeded expectations.
The Commerce Department released its report on construction spending in the month of June on Tuesday, showing that spending rose more than economists had expected. The increase was partly due to growth in spending on public construction. The report showed that construction spending rose 0.3 percent in June after coming in unchanged in May. Economists had been expecting construction spending to increase by 0.2 percent compared to the 0.4 percent decrease originally reported for the previous month. As mentioned above, the increase was partly due to growth on spending on public construction, which rose 0.8 percent in June. A modest increase in highway construction spending contributed to the increase in public construction spending. The report also showed that spending on private construction fell 0.1 percent in June, as spending on residential construction fell 1.0 percent. Spending on non-residential construction rose 2.7 percent in June.

The Institute for Supply Management index rose unexpectedly.
Tuesday morning, the Institute for Supply Management released its report on business activity in the manufacturing sector in the month of July. The report showed that the pace of growth in the sector accelerated unexpectedly. The ISM said that its purchasing managers index rose to 54.7 in July from 53.8 in June, with a reading above 50 indicating growth in the sector. Economists had expected the index to remain unchanged at 53.8. The increase by the index was partly due to a faster pace of production growth, with the production index rising to 57.6 in July from 55.1 in June. At the same time, the new orders index fell to 56.1 in July from 57.9 in June. The report also showed that employment expanded after a one-month contraction, as the employment index rose to 50.7 in July from 48.7 in June.


10:30AM The Sensex recovers in late trading on news of improved rating
The Sensex in India finished up 7.78 points, or 0.07%, to close at 10,751.66. The turnover on BSE was Rs 2,191 crore, lower than Monday’s Rs 2,271 crore. The market-breadth was weak, but it had improved greatly in the latter part of trading in the wake of news of Fitch’s investment grade rating of India. On the day’s trading, 1,287 shares declined, 1,106 advanced and 88 shares were unchanged.

Fitch upgraded India''s long-term foreign and local currency debt to ''BBB-'' from ''BB+'', with stable outlooks. The short-term foreign currency debt rating was also lifted to ''F3'' from ''B'' and the country ceiling was upgraded to ''BBB-'' from ''BB+''. Fitch is of the opinion that fiscal consolidation is at last taking hold in India, strengthened by the solid growth and India''s strong external balance sheet.

The major gainers on the day were BHEL, climbing 2.93% to Rs 2,105, ACC gaining 2.15% to Rs 861, Bharti Airtel adding 2.13% to Rs 391, L&T advancing 1.72% to Rs 2,249 and Wipro rising 1.18% to Rs 497. BHEL advanced for the second day running today on strong first-quarter results and ACC after saying on Tuesday its July shipments advanced 11% to 1.42 million tonnes from 1.28 million tonnes a year ago.