Stock futures are lower and interest rates are rallying after several key earnings releases failed to impress the markets.

Investing pessimism began to spread in after hours trading last night after IBM and Texas Instruments reported lower than expected top line revenue growth. Equity futures moved even lower this morning after Goldman Sachs said Q2 earnings fell to $453 million ($0.78/share) compared to $2.7 billion ($4.93/share) in the same period of 2009.  Although Goldman's earnings reflect a $550 million SEC fine and a $600 million expense related to U.K payroll taxes on bonuses, GS said client activity had declined across all business channels.

Plain and Simple: the market is no longer satisfied with bottom line earnings per share growth, cost cutting, a steep yield curve, inventory reductions, and record productivity just aren't getting the job done. Investors want to see top line revenue growth.

June Housing Starts and Building Permits data flashed at 830AM. The results were mixed....

• Housing Starts:  -5.0% to 549,000 annualized units in June after plummeting 14.9% to 578,000 annualized units in May (previously -10%). This was WORSE THAN EXPECTATIONS which called for a print of 580,000 starts in June.
• Building Permits: +2.1% to 586,000 annualized units in June after a 5.9% decline to 574,000 annualized units in May.  This was BETTER THAN EXPECTATIONS which called for 570,000 permits in June.

S&P 500 futures moved to session lows after Goldman earnings printed but rebounded higher after housing data. S&Ps are currently -8.75 at 1,055.

Yield levels are lower across the curve but off the best levels of the overnight session. The 2 year note yield is 0.8bps lower at 0.585% while the 10 year note has rallied 3.1bps to 2.932%.

Rate sheet influential MBS prices are higher and yield spreads are ever so slightly tighter. The September delivery FNCL 4.0 is +0-09 at 101-14. The September delivery FNCL 4.5 is +0-07 at 103-19. The secondary market current coupon is 3.7bps lower at 3.755%.