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July 3, 2013  Wed 6:58 AM CT

SPX: SEE CHART GET CHAIN FIND STRATEGIES
Equities are falling before a shortened trading session today and a holiday tomorrow.

S&P 500 futures are down half a percent, while Europe is lower by 1 percent to 2 percent after two Portuguese cabinet ministers resigned. That raised fears that the country could face sudden elections and derail reforms. Most Asian indexes also fell in the overnight session, led by a 2.5 percent drop in Hong Kong as Chinese economic data continued to disappoint. This time the country's service-sector purchasing managers index missed expectations, falling to its lowest level in nine months.

The market has been churning in a range for more than a month after ripping to new all-time highs in early May. While economic prospects have been brightening in developed countries such as the United States and Japan, emerging markets have lagged and continue to draw bearish options bets.

The S&P 500 has also hit resistance at its 50-day moving average, which had provided support in February, April, and early June. This suggests that the strong momentum--seven months of gains between November and May--has been broken for the time being. Attention will now focus on whether the economy can survive higher interest rates and weakness in countries such as China and India.

ADP's private-sector payroll report at 8:15 a.m. ET is the main event on today's calendar. Economists are looking for a reading of 150,000 for June, up from 135,000 the previous month. Challenger, Gray & Christmas already reported that layoffs rose 8.2 percent in June.

The market will close at 1 p.m. ET today and remain shut tomorrow in observance of Independence Day. Friday will likely be a very light session in terms of volumes, but it will feature the key non-farms payroll report one hour before the opening bell. Next week brings the start to corporate-earnings season.

Foreign-exchange markets also show a bearish pattern today, with the euro and Australian dollar down but the Japanese yen up across the board.

Commodities, however, are strangely bullish given the move in equities and currencies. Oil and gold rose by more than 1 percent and silver is up 2.5 percent. Agricultural foodstuffs are also up across the board and copper is little-changed.
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