Mid-day Update

S&P 500 1,119.51 +.30%
NASDAQ 1,970.24 +.35%

Leading Sectors
Restaurants +1.46%
Semis +1.35%
HMO's +1.30%

Lagging Sectors
Airlines -.72%
Nanotechnology -.77%
I-Banks -1.80%

Other
Crude Oil 39.07 -1.59%
Natural Gas 6.36 -1.0%
Gold 403.30 +2.62%
Base Metals 112.74 +1.83%
U.S. Dollar 87.61 -.57%
10-Yr. T-note Yield 4.47% +.04%
VIX 16.03 -1.35%
Put/Call 1.05 -2.78%
NYSE Arms 1.20 -44.70%

Market Movers
FILE -19.4% after saying second-quarter profit was less than analysts expected.
MSGI +57.5% after announcing a strategic alliance with the SYTEX Group to deliver homeland security products.
ISSC +19.1% after saying that the FAA awarded the company a TSO certification for their Large Flat Panel display and upgrade to Buy at Friedman Billings.
ARO +7.9% after saying it will be added to the S&P Mid-cap 400 Index.
APPB +7.4% after reiterating 2Q and 04 forecasts.
NTES -16.7% after lowering 2Q forecast.
ASCL -15.4% after cutting 2Q and 3Q forecast.
LWAY -10.9% after announcing the acquisition of a closely held Philly-area cream cheese producer.

Economic Data
None of note.

Recommendations
SVU and LLL cut to Underweight at JP Morgan. DYAX rated Buy at Deutsche Bank, target $18. PDLI rated Buy at Deutsche Bank, target $30. CHIR rated Buy at Deutsche Bank, target $60. ENCY rated Buy at Deutsche Bank, target $16. DNA rated Buy at Deutsche Bank, target $68. BIIB rated Buy at Deutsche Bank, target $72. TKTX rated Buy at Deutsche Bank, target $28. MAT cut to Sell at Bank of America, target $13. AVP rated Overweight at Morgan Stanley, target $54. Goldman reiterated Outperform on AUO, AMGN, DNA, GCI and MSFT. Goldman reiterated Underperform on DJ. Citi SmithBarney said to Buy SSI ahead of tomorrow's FCC meeting. Citi says to Buy PLUG, as many catalysts are on the horizon. Citi reiterated Buy on JNPR, target $32.50. Citi reiterated Buy on FFIV, target $45. Citi reiterated Buy on FDRY, target $15. Citi reiterated Buy on ETS, target $4. Citi reiterated Buy on RDWR, target $25. Citi reiterated Buy on EXTR, target $11. Citi reiterated Buy on QSFT, target $16. Citi reiterated Buy on VRTS, target $22. Citi reiterated Buy on ASCL, target $18. Citi reiterated Buy on SLM, target $46.

Mid-day News
U.S. stocks are quietly higher mid-day as a declining U.S. dollar and crude oil prices boost cyclical shares. Deutsche Telekom AG's T-Systems International unit is seeking to link 10,000 wireless computer-access locations into one network to make it more convenient for mobile users, Reuters reported. Boston school bus drivers and monitors say they will picket the Democratic Convention, causing a potential problem for Senator Kerry, who said he wouldn't cross a picket line, the Boston Globe reported. It takes the average U.S. worker 189 days of work just to pay off his or her share of federal, state and local taxes, the Washington Post reported. The U.S. Senate version of a six-year transportation bill calls for states to levy tolls on existing interstate highways to raise funds for road building and to ease congestion, the Washington Post reported. Phoenix and surrounding parts of Arizona face power shortages and blackouts after a fire damaged a power substation near Sun City, the Arizona Republic reported. Pfizer said Chinese authorities overturned the company's patent for Viagra, Dow Jones reported. Paul McCulley, a PIMCO managing director, told CNBC that a "great deal" of the bear market for bonds has passed and that the Fed can raise rates at a measured pace. U.S. mortgage applications surged last week by the most in more than three months as mortgage rates fell below 6% for the first time since April, Bloomberg reported. AT&T may lose its investment-grade credit ratings because of plunging profit, bond prices show. General Motors increased rebates to $5,000 on most sport-utility vehicles and Ford boosted offers on several models, Bloomberg said. Pfizer is expanding its drug-discount programs to allow 43 million uninsured Americans to buy medicines such as its Lipitor cholesterol treatment at a lower cost. Boeing won orders worth $1.2 billion for 10 7E7 airliners from Britain's First Choice Holidays and Italy's Blue Panorama, the first European customers for the aircraft, Bloomberg reported. 9 in 10 people in France favor loosening the 35-hour maximum work week limit, saying they want to be able to increase their earnings, Bloomberg reported. Crude oil prices are declining after the Saudi Oil Minister said the kingdom is committed to boosting OPEC output quotas August 1, Bloomberg reported.

BOTTOM LINE: The Portfolio is modestly higher today on strength in my telecom equipment, gold and internet longs and weakness in my oil service shorts. I have not traded today and the Portfolio is still 50% net long. I expect stocks to rise modestly into the close on declining oil prices and strength in basic materials/ technology shares.