Mid-day Update

S&P 500 1,121.69 +.32%
NASDAQ 1,986.04 +.38%

Leading Sectors
Wireless +3.15%
Hospitals +2.65%
Airlines +2.08%

Lagging Sectors
Nanotechnology -1.42%
Papers -1.53%
Iron/Steel -2.28%

Other
Crude Oil 35.99 -1.40%
Natural Gas 5.58 +.58%
Gold 394.50 -.95%
Base Metals 108.32 -5.30%
U.S. Dollar 90.93 +.49%
10-Yr. Long-Bond Yield 4.43% -.63%
VIX 16.01 -3.96%
Put/Call .75 -6.25%
NYSE Arms .57 -52.89%

Market Movers
MOT +18.55% after significantly beating 1Q estimates, raising 2Q guidance substantially and multiple upgrades.
F +10.12% after significantly beating 1Q estimates, raising 2Q and 04 guidance substantially and multiple upgrades.
SANM +14.7% after beating 2Q estimates and multiple upgrades.
FLIR +14.4% after beating 2Q estimates and raising 04 forecast.
Education Stocks up across the board on strong earnings from CECO and COCO.
POWI +9.12% on American Technology upgrade to Buy.
UTEK -21.05% after missing 1Q estimates.
WEBX -21.59% after meeting 1Q estimates, but lowering 2Q and 04 forecast.
DV -14.02% after missing 2Q estimates and CSFB downgrade to Underperform.
ISSX -14.84% after missing 1Q estimates and lowering 2Q and 04 forecast.
ACS -8.6% after missing 3Q forecast and lowering guidance.
SCSS -12.27% after meeting 1Q estimates, lowering 2Q guidance and raising 04 forecast.

Economic Data
None of note.

Recommendations
MOT raised to Sector Outperform at CIBC, target $25. GPI, CAO and PBY rated Outperform at Thomas Weisel. STX cut to Sell at Thomas Weisel. WSH raised to Overweight at Prudential, target $45. MXIM raised to Overweight at Prudential, target $58. MRVL, AGR/A and STM cut to Underweight at Prudential. NCI rated Outperform at CSFB, target $23. DV cut to Underperform at CSFB. GDW raised to Outperform at Bear Stearns, target $122. BCR raised to Outperform at Bear, target $115. SANM raised to Outperform at Bear, target $16. Goldman Sachs reiterated Outperform on MO, WMT, CFC, VIAB, ACS, DTV, CCU, VIAB, CDL, WON, CTSH and STA. Goldman reiterated Underperform on IPC, AMCC and SLG. Goldman downgraded OSI to Underperform. Citi Smith Barney said to Buy HLT based on belief they will materially increase dividend within next couple of quarters. Citi reiterated view that risk to oil prices is on the downside. Citi reiterated Sell on STX, target $7. Citi raised estimates and target to $25 on MOT. Citi Strongly reiterated Buy on WFC, target $67. Citi reiterated Buy on CKFR, target $39.

Mid-day News
U.S. stocks are mostly higher mid-day as Fed Chairman Greenspan said the U.S. economy is growing vigorously without any signs of broad-based inflation as unit labor costs remain subdued. Ask Jeeves CEO told CNBC that his company is big enough to avoid being bought after it agreed last month to acquire Interactive Search Holdings. A car bomb exploded today in the center of Saudi Arabia's capital, Riyadh, killing one. Five other bombs were defused, Saudi tv reported. Time Warner's AOL unit plans to widen its Internet audience and boost advertising sales by making some content free and more accessible to subscribers, the Wall Street Journal reported. Syria has given weapons to opposition forces in Iraq and has helped them cross the border, the Washington Times reported. The U.S. economy is in a "vigorous expansion" that has not yet produced "broad-based" inflation pressures, Fed Chairman Greenspan said. He said that while unit labor costs, which account for 70% of inflation, no longer seem to be falling rapidly, those costs have yet to post a decisive upturn. He also said, "As I have noted previously, the fed funds rate must rise at some point to prevent pressures on price inflation from eventually emerging." Separately, the Fed's Parry said, "The Fed will have to raise rates significantly at some point to prevent growth from triggering inflation."

BOTTOM LINE: The Portfolio is down slightly today as one of my longs is falling on its earnings report and my shorts are mostly higher. Greenspan and Parry's comments taken together lead me to conclude that the Fed will move sooner rather than later and they are in the initial stages of preparing the markets for this. I still expect the first rate hike at the June 28-30 meeting, barring several weaker-than-expected jobs reports. I have not traded today and the Portfolio is still 25% net long.