Mid-day Update

S&P 500 1,140.08 -.35%
NASDAQ 2,012.51 -1.25%

Leading Sectors
Fashion +.78%
Restaurants +.57%
Energy +.51%

Lagging Sectors
Defense -1.95%
Disk Drives -2.49%
Semis -2.56%

Other
Crude Oil 34.40 +.44%
Natural Gas 5.12 -1.41%
Gold 399.50 +.38%
Base Metals 110.16 -1.66%
U.S. Dollar 86.85 -.45%
10-Yr. Long-Bond Yield 4.07% -.66%
VIX 16.52 +2.99%
Put/Call .58 -32.5%
NYSE Arms 1.27 -14.77%

Market Movers
QCOM +5.64% on boosting 2Q forecast significantly.
LOW -2.7% on profit-taking as 4Q beat expectations and raised 1Q guidance.
CMOS -12.4% on $660M offer to buy NPTest, a 29.3% premium.
VRTX +12.6% after saying an experimental drug reduced the growth of pancreatic and colon tumors in animal studies.
INTC -2.3% after saying that 2003 profit would have been 18% less if they had accounted for options as an compensation expense.
TXU +6.73% after hiring the former CFO of Entergy as CEO.

Recommendations
Morgan Stanley thinks the oil service sector is getting ready for another leg up. MS sees flatish vehicle sales in the next 6-9 months. MS also raised price target for TK to $70 from $62. Goldman Sachs is bullish on IGT, HET, CZR and STN. Citigroup Smith Barney says INTC and TXN generate less profit per sales dollar now than in the past, while NSM, AGR/A, LLTC and MXIM appear more efficient this cycle. Citi still likes vertically integrated semi companies with margin leverage that can drive EPS meaningfully higher, INTC, FCS, CY and MU. Citi is also positive on HMO's, favorites are ATH, WLP and UNH. Finally, Citi is positive on consumer cyclicals due to easy comps, tax benefits, lack of war, no SARS and improved hiring prospects. COMS was cut to "Equal Weight/Neutral" at Lehman. EDS was cut to "Sell" at Deutsche Bank.

Economic Data
None of Note. Greenspan said consumers' ability to handle debt is in good shape, with debt service levels flat over the last 2 years. Greenspan said the ratio of net worth to income is currently somewhat higher than its long-term average. He also said rising credit card use isn't a financial weakness. Finally, he said a rise in renter's debt may be of concern.

Mid-day News
U.S. stocks are falling mid-day, led by weakness in technology shares. Intel said 04 gross margins will be about 62%, five percentage points wider than in 03. Wal-Mart Stores said February sales at stores open at least a year are rising near the high end of its expectations. The U.S. is sending 50 marines to guard the Haiti embassy, according to Sky News. The U.S. Army plans to cancel the Boeing/United Technologies Comanche helicopter program. There is significant insider buying in TYC and CVG in the latest report from Bloomberg. Soybeans are hitting a 15-yr. high on concern for crops in Brazil. U.S. 4Q Online commerce rose 25% to $17.2B, 4 times as fast as all retail sales.

BOTTOM LINE: The Portfolio, positioned market neutral, is having a good day as my shorts are dropping more than my longs. The weakness in tech is broad-based. I may close a couple of profitable shorts later in the day as my indicators are showing tech is getting oversold near-term.