Market Talk

- Time’s Curious Capitalist blogger John Curran offers several themes to keep an eye on about current market conditions. “First, stocks are going nowhere,” he says, as there are lots of headlines and big moves in both directions, but the market is still flat year-to-date. Corporate earnings are way up, though mostly on cost-cutting. Oil prices are inching backing up, especially as dollar weakens. Consumer spending isn’t improving, savings rate is increasing and European debt crisis isn’t over.

- AOL’s struggling so much that it couldn’t even meet the Street’s diminished 2Q expectations. MediaMemo blogger Peter Kafka notes two important themes to watch: AOL’s ad business and rate of decline at its subscription business.

- Investors and consumers have been so conditioned to look out for inflation that the threat of deflation, particularly in housing and wages, isn’t being taken as seriously as it should be, Yves Smith writes at naked capitalism. “It is hard to prove in a tidy way, but I see more signs of discounting in the economy, even in goods and services aimed at upper income consumers supposedly unaffected by the downturn.”

- “Inflation expectations are falling and there is currently no end in sight,” notes David Beckworth, assistant professor of economics at Texas State University. “Let me be very clear what all of this implies: by failing to stabilize inflation expectations the Fed is effectively tightening monetary policy at a most inopportune time. I hope this is not how the Fed wants to be remembered.”

- Hackers have released their latest set of instructions to help iPhone 4 owners run their devices on multiple carriers.

- Bearish sentiment among advisers fell for a second-straight week, according to Investors Intelligence. Now, only 33% of the survey’s respondents say they are in the bearish camp. “While a decline in bearish sentiment is typical when equities rise, one could make the case that it should be lower,” Bespoke Investment Group says. “After all, the current level of bearish sentiment is the same now as it was when the S&P 500 was trading at it correction lows in early July.”

- “Maybe, just maybe, the thing to do is let the deleveraging/saving/expense cutting process take place,” Credit Writedowns says. “Just as forest fires are a part of the natural life cycle of forests, so is the cleansing and seeding process of an economic downturn.”

- Research In Motion’s (RIMM) Torch may be the best BlackBerry to date, but it’s not as good as Apple’s (AAPL) iPhone or the plethora of phones using Google’s (GOOG) Android software, Dan Frommer writes at Silicon Alley Insider. “The biggest problem is that RIM has not been able to build a mobile operating system that feels nearly as modern and elegant as Android or Apple’s iOS,” Frommer says. “As a result, even RIM’s newest phone feels old next to a new iPhone or Android device.”

- Oracle’s Larry Ellison joins other billionaires in following a call by Warren Buffett and Bill and Melinda Gates to pledge the majority of their wealth to charity.

- Mosque near Ground Zero gains approval, but opponents are expected to fight it in court.

Sit back and take a deep breath, there’s a ton of news to digest today.

US stocks stage a furious late-day rally and close mixed as Senate passes financial overhaul bill, but more importantly, speculation swirled late in the day that a settlement had been reached between the SEC and Goldman Sachs (GS) over the fraud lawsuit.

Headlines crossed after the closing bell confirming the rumor, saying Goldman agreed to pay $550 million to settle the charges. SEC’s planning to hold a news conference any minute.

Dow snaps its seven-day winning streak, closes down 7 at 10359, but was down as much as 126 earlier in the session before recovering. S&P 500 rises 1 to 1096 and Nasdaq Comp slightly drops 0.8 to 2249.

JPMorgan kicked off the day by generating strong 2Q profits, although revenue fell in four of its six lines of business. Additionally, there was a plethora of economic data this morning which can be described as suspect, at best. Producer prices fall for third straight month and manufacturing data was weak. Jobless claims dip to two-year low, but seasonal factors skewed the data.

But all the fireworks came after hours. In addition to Goldman, Google shares are sliding 4% in late trading after the Internet giant reported 2Q earnings that missed analysts expectations.

WSJ also reports latest developments surrounding the scandalous iPhone 4, saying Apple (AAPL) overruled internal concerns about antenna reception and denied carriers the proper time to test the device before selling it.

Hectic week ends with a busy day tomorrow as GE, BofA and Citi all report quarterly results. As Art Cashin always says, stay nimble, folks.

- “I continue to believe this recent rally is a case of the banks dragging the rest of the market higher,” The Pragmatic Capitalism blogger says. But that optimism may be short-lived. “Keep tabs on the next few weeks of earnings season as strong earnings are likely being priced in as we speak,” blog adds. “More importantly, expect the weak economic data to take center stage as we get deeper into earnings season and bullishness returns.”

- Rumors of an Apple (AAPL) iPhone 4 recall are floating around the blogosphere, but analysts are convinced it’s a highly unlikely event. Analysts say the issue isn’t serious enough to warrant such drastic action. “Seriously, an iPhone 4 recall?” Digital Daily blogger John Paczkowski ponders. “Steve Jobs would rather recall hiring John Sculley.”

- Apple’s reportedly begun removing discussions about Consumer Report’s decision not to recommend the iPhone 4 from a customer response portion of its website. Apple has been known to remove or lock discussion threads before, drawing ire from unhappy customers

- Trading of S&P 500 stocks has reached its highest correlation since the 1987 crash. “I think it’s more of a sign of indecision, and traders sitting on their hands,” Barry Ritholtz writes at The Big Picture.

- Even though Windows XP has been around for nearly a decade, Microsoft (MSFT) now says it doesn’t have plans to retire it anytime soon. “Our business customers have told us that the removing end-user downgrade rights to Windows XP Professional could be confusing,” MSFT says on a company blog. It’s a pretty unusual move, but “with 74% of business PCs running XP, the move is more proof that it’s the OS that won’t die,” Gregg Keizer writes at ComputerWorld.

- Today’s FDA advisory committee meeting to evaluate safety of GlaxoSmithKline’s (GSK) diabetes drug Avandia is generating lots of buzz on Twitter and various health blogs. For a sample, try CardioBrief.org by longtime medical journalist Larry Husten, who’s posting updates with a touch of irreverence every few minutes.

- Research In Motion (RIMM) has unveiled a new, free application to enhance security for consumer users of its BlackBerry smartphone. BlackBerry Protect will allow consumers to remotely backup and restore data on their device, as well as locate lost or stolen devices via a desktop computer. The app, disclosed by RIMM on its Inside Blackberry blog, will be available in limited beta testing later this week and open beta later this year.

- “In decades of market analysis, I can’t remember a time that I’ve heard many analysts quoting some support or resistance level as being ‘critical’ for the market,” John Hussman writes.

- Stubbornly high unemployment rate gets lots of attention, but labor market’s fragility is evident in declining hourly wages, former labor secretary Robert Reich says. June’s decline in average weekly hours worked sent weekly paychecks down 4.5% at an annualized rate, he notes. “In other words, Americans are keeping their jobs or finding new ones only by accepting lower wages.”

- WSJ’s George Steinbrenner obit.